Pool Operator Exemptions Of 17 Entities Ordered Ineffective By CFTC

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The US Commodity Futures Trading Commission, or CFTC, has announced that it had issued an order. This order deemed the commodity pool operator exemptions of 17 entities to be ineffective. This was done after a special call was made by the Division of Swap Dealers and Intermediary Oversight, or DSIO. The order in question had gained the approval of the Commission on the 7th of July, 2020, and effective immediately.

Setting An Example

Joshua B. Sterling stands as the Director of DSIO, and gave comments about the matter at large. He stated that this commission action, alongside the related use of the CFTC’s special call authority, stands as a powerful message about the CFTC at large. Sterling states that this will stand as a testament to how seriously they take both the registration and the exception regime. Sterling described this regime as a fundamental aspect of the oversight over their market participants, and thus states that the CFTC is very dedicated to keeping its integrity intact. This, as a result, leads to a swift reaction should a firm fail to comply with the rules in question, says Sterling.

Each of the entities that had their exemptions revoked are reportedly based abroad. These entities claimed exemption from registration as CPO, citing Commission Regulation 4.13(a)(2). This regulation provides that a person doesn’t need to be registered as a CPO if a few criteria are met.

Investigations Ensued

These criteria include that the operated pool doesn’t have more than 15 participants at any given point of time. The other criteria are that the total gross capital contribution that it had received for units of participation in every pool it operates does not exceed that of $400,00. This extends to the pools themselves, as well, in terms of total aggregate value.

The special call itself was initiated as per Commission Regulation 4.13(c)(1)(iii). This regulation mandates that a person claiming exemption from this regulation submit a special call. This is due to the Commission may wish to demonstrate the eligibility as well as compliance for the criteria of this exemption.

Privileges Revoked

Amanda Olear stands as the Deputy Director of DSIO, and gave a public statement about the matter, as well. She stated that the CFTC had worked alongside the national Futures Association (NFA), identifying a few credible reasons as to why certain entities claiming exemptions didn’t meet the needed criteria for eligibility.


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