CFTC Part 4 Exemption Easy Reference Guide

An entity acting as a pool operator where the following applies:

• Person operates only one pool at any time;
• Does not advertise;
• Does not receive compensation; and
• Is not otherwise required to be registered with the CFTC and is not a business affiliate of any person required to register with the CFTC.

• Each person who has claimed an exemption from registration under this section must comply with certain recordkeeping and participant reporting requirements that are outlined in CFTC Regulation 4.13(c) and participant disclosure requirements in 4.13(a)(7).

  Note: If the pool operator claiming this exemption later applies for registration as a commodity pool operator, then the pool operator must include with its application the financial statements and other information required by 4.22(c)(1) through (5) for each pool that it has operated as an operator exempt from registration. That information must be presented and computed in accordance with generally accepted accounting principles consistently applied.

• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the person claiming exemption.
• Provide the name of the pool for which the exemption is being claimed.
• Must attest that neither the person nor any of its principals has in its background a statutory disqualification that would require disclosure under Section 8a(2) of the Commodity Exchange Act if such person sought registration (unless such disqualification arises from a matter which was disclosed in connection with a previous application for registration where such registration was granted).

• Must be filed by a representative duly authorized to bind the pool operator.

  Note: If any of the information contained or representations made in the notice becomes inaccurate or incomplete, then it must be amended within 15 business days after the pool operator becomes aware of the occurrence of such event.

• Must be filed no later than the time that the pool operator delivers a subscription agreement for the pool to a prospective participant in the pool.

  Note: If the pool operator is registered with the CFTC as a commodity pool operator and intends to withdraw from registration in order to claim this exemption, then the person must (1) notify its pool's participants in written communication physically delivered or delivered through electronic transmission that it intends to withdraw from registration and claim the exemption and (2) provide each such participant with a right to redeem its interest in the pool prior to the person filing a notice of exemption from registration.

Within 60 days of calendar year end, must either: 

• Affirm the notice of exemption from registration,
• Withdraw such exemption due to the cessation of activities requiring registration or exemption therefrom, or

• Withdraw such exemption and apply for registration.

  Note: Failure to affirm the exemption will result in the exemption being withdrawn after the 60 day period has ended. For non-registrants, the withdrawal of the exemption may subject you to enforcement action by the CFTC.

An entity acting as a pool operator where the following applies:

• Person operates pool(s) with total gross capital contributions in all pools operated or intended to be operated that do not exceed $400,000 and none of the pools operated has more than 15 participants at any time.
• Persons that can be excluded from the 15 participants: (1) the pool's operator and CTA and their  principals, (2) any of their children, siblings or parents, (3) the spouse of any of these persons, and (4) any relative of these persons, including a relative of a spouse who has the same principal residence.

• Each person who has claimed an exemption from registration under this section must comply with certain recordkeeping and participant reporting requirements that are outlined in CFTC Regulation 4.13(c) and participant disclosure requirements in 4.13(a)(7).

  Note: If the pool operator claiming this exemption later applies for registration as a commodity pool operator, then the pool operator must include with its application the financial statements and other information required by 4.22(c)(1) through (5) for each pool that it has operated as an operator exempt from registration. That information must be presented and computed in accordance with generally accepted accounting principles consistently applied.

• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the person claiming exemption.
• Provide the name of the pool for which the exemption is being claimed.
• Must attest that neither the person nor any of its principals has in its background a statutory disqualification that would require disclosure under Section 8a(2) of the Commodity Exchange Act if such person sought registration, unless such disqualification arises from a matter which was disclosed in connection with a previous application for registration, where such registration was granted.

• Must be filed by a representative duly authorized to bind the pool operator.

  Note: If any of the information contained or representations made in the notice becomes inaccurate or incomplete, then it must be amended within 15 business days after the pool operator becomes aware of the occurrence of such event.

• Must be filed no later than the time that the pool operator delivers a subscription agreement for the pool to a prospective participant in the pool.

  Note: If the pool operator is registered with the CFTC as a commodity pool operator and intends to withdraw from registration in order to claim this exemption, then the person must (1) notify its pool's participants in written communication physically delivered or delivered through electronic transmission that it intends to withdraw from registration and claim the exemption and (2) provide each such participant with a right to redeem its interest in the pool prior to the person filing a notice of exemption from registration.

Within 60 days of calendar year end, must either: 

• Affirm the notice of exemption from registration,
• Withdraw such exemption due to the cessation of activities requiring registration or exemption therefrom, or

• Withdraw such exemption and apply for registration.

  Note: Failure to affirm the exemption will result in the exemption being withdrawn after the 60 day period has ended. For non-registrants, the withdrawal of the exemption may subject you to enforcement action by the CFTC.

An entity acting as a pool operator where the following applies:

• Exemption provides relief from CPO registration in cases where the pool trades only minimal amount of futures.
• With the exception of non-U.S. investors, participation is restricted to accredited investors, a trust formed by an accredited investor for the benefit of a family member, knowledgeable employees, and QEPs.
• Generally, participations in the pool are not marketed as a vehicle for trading in the commodity futures or commodity options markets.
• At all times, pool meets one of two tests below [see CFTC Regulation 4.13(a)(3)(ii) for details]:
  1. The aggregate initial margin, premiums, and minimum security deposits do not exceed 5% of the liquidation value of the pool's portfolio, or
  2. The aggregate net notional value of positions does not exceed 100% of the liquidation value of the pool's portfolio.

• Each person who has claimed an exemption from registration under this section must comply with certain recordkeeping requirements that are outlined in 4.13(c) and participant disclosure requirements in 4.13(a)(7).

• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the person claiming exemption.
• Provide the name of the pool for which the exemption is being claimed.
• Must attest that neither the person nor any of its principals has in its background a statutory disqualification that would require disclosure under Section 8a(2) of the Commodity Exchange Act if such person sought registration, unless such disqualification arises from a matter which was disclosed in connection with a previous application for registration, where such registration was granted.

• Must be filed by a representative duly authorized to bind the pool operator.

  Note: If any of the information contained or representations made in the notice becomes inaccurate or incomplete, then it must be amended within 15 business days after the pool operator becomes aware of the occurrence of such event.

• Must be filed no later than the time that the pool operator delivers a subscription agreement for the pool to a prospective participant in the pool.

  Note: If the pool operator is registered with the CFTC as a commodity pool operator and intends to withdraw from registration in order to claim this exemption, then the person must (1) notify its pool's participants in written communication physically delivered or delivered through electronic transmission that it intends to withdraw from registration and claim the exemption and (2) provide each such participant with a right to redeem its interest in the pool prior to the person filing a notice of exemption from registration.

Within 60 days of calendar year end, must either: 

• Affirm the notice of exemption from registration,
• Withdraw such exemption due to the cessation of activities requiring registration or exemption therefrom, or

• Withdraw such exemption and apply for registration.

  Note: Failure to affirm the exemption will result in the exemption being withdrawn after the 60 day period has ended. For registered CPOs, withdrawal of the exemption will result in the firm being subject to Part 4 Requirements for that pool regardless of whether the firm otherwise remains eligible for the exemption. For non-registrants, the withdrawal of the exemption may subject you to enforcement action by the CFTC.

An entity acting as a pool operator where the entity is one of the following:

• An Investment Advisor registered under the Investment Advisors Act of 1940 that operates an investment company under the Investment Company Act of 1940 or operates a business development company that elected an exemption from registration as an investment company under the Investment Company Act of 1940;
• An insurance company subject to state regulations;
• A bank, trust or any other such financial depository institution subject to U.S. regulation; or
• A trustee of a named fiduciary or an employer maintaining a pension plan that is subject to ERISA.

Furthermore, if the person claiming the exclusion is an Investment Advisor, then the pool must be operated as follows:

• For bona fide hedging purposes:
  • Where derivatives trading will not exceed 5% of the liquidation value of the qualifying entity's portfolio or
  • Where the aggregate net notional values of the entity's commodity interest positions do not exceed 100% of the liquidation of the pool's portfolio.
• And where it will not be, and has not been, marketing participation to the public as a commodity pool or otherwise or as a vehicle for trading in commodity futures, commodity options or swap markets.

• Each person who has claimed an exemption from registration under this section must comply with certain participant disclosure requirements in CFTC Regulation 4.5(c)(2).

• Provide the following: Name of claimant, name of the qualifying entity (Fund) that the CPO intends to operate pursuant to exclusion.

• Must be filed by a representative duly authorized to bind the pool operator.

  Note: If any of the information contained or representations made in the notice becomes inaccurate or incomplete, then it must be amended within 15 business days after the pool operator becomes aware of the occurrence of such event.

• Must be filed prior to the date upon which the person intends to operate the pool pursuant to the exclusion.

Within 60 days of calendar year end, must either: 

• Affirm the notice of exemption from registration,
• Withdraw such exemption due to the cessation of activities requiring registration or exemption therefrom, or

• Withdraw such exemption and apply for registration.

  Note: Failure to affirm the exemption will result in the exemption being withdrawn after the 60 day period has ended. For registered CPOs, withdrawal of the exclusion will result in the firm being subject to Part 4 Requirements for that pool regardless of whether the firm otherwise remains eligible for the exclusion. For non-registrants, the withdrawal of the exemption may subject you to enforcement action by the CFTC.

A registered CPO that offers or sells participations in a pool solely to QEPs as defined in CFTC Regulation 4.7.

With respect to pools with all QEPs, the CPO has certain disclosure document and recordkeeping relief that are outlined in 4.7(b).

• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the CPO.
• CPO must select the pool for which the exemption will be filed and specify the closing date of the offering or that the offering will be continuous.
• Must be filed by a representative duly authorized to bind the CPO.
• Must attest that neither the person nor any of its principals has in its background a statutory disqualification that would require disclosure under Section 8a(2) and 8a(3) of the Commodity Exchange Act if such person sought registration, unless such disqualification arises from a matter which was disclosed in connection with a previous application for registration where such registration was granted or which was disclosed more than 30 days prior to the filing of this exemption.

Exemption is processed through NFA's Exemptions System. This exemption is filed under the Pool Exemptions section on the Filing Index page.

Must be filed before the pool first enters into a commodity interest transaction or prior to any offer or sale of any participation in the exempt pool.

No annual affirmation is required.

A registered CPO that has filed a 4.7 exemption.

• CPO that has filed a 4.7 exemption for a pool is provided relief from maintaining the pool's books and records at its main business office. Books and records can be maintained by third-party recordkeepers that are (a) the pool's administrator, (b) the pool's distributor, (c) the pool's custodian, or (d) a bank or registered broker or dealer acting in a similar capacity to an administrator, distributor, or custodian with respect to the pool.
• However, (1) books and records must be made available to a representative of the CFTC for inspection within 48 hours at main business office or within 72 hours if books and records are located outside the U.S., (2) the CPO remains responsible for ensuring all books and records required in CFTC Regulation 4.7(b)(5) are kept in accordance with 1.31, and (3) disclosure of the location of books and records must be made in the pool's disclosure document, if any.

• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the CPO.
• Must identify each alternative recordkeeper, and provide the main business address and main business telephone number of each recordkeeper, and provide the name and telephone number of a contact person for each recordkeeper.
• Must specify by rule reference the books and records that will be maintained with each third-party recordkeeper.
• Must electronically upload with NFA a statement from each person who will be keeping required books and records. The statement must acknowledge that the person will keep and maintain required books and records for the pool and will keep them in accordance with 1.31 and will make such books and records available for inspection by a representative of the CFTC, NFA or the U.S. Department of Justice.
• CPO must select the pools for which the exemption will be filed. If the CPO wishes to claim this exemption on the firm's behalf, it must file a firm level exemption for the CPO under 4.23(c).
• Must be filed by a representative duly authorized to bind the CPO.

Note: If the contact information or location of any of the books and records required under 4.7(b)(5) changes, then the notice of exemption must be promptly amended.

Exemption is processed through NFA's Exemptions System. This exemption is filed under the Pool Exemptions section on the Filing Index page.

Must be filed at the time the CPO registers or delegates its recordkeeping obligations, whichever is later.

No annual affirmation is required.

A registered CPO that operates a pool where the following applies:

• The pool will be offered and sold pursuant to Securities Act of 1933 or related exemption.
• The pool will generally and routinely engage in the buying and selling of securities and securities related instruments.
• The pool will not enter into commodity interest transactions in which the aggregate initial margin, premiums, and minimum security deposits exceeds 10% of the fair market value of the pool's assets.
• The pool will trade commodity interests in a manner solely incidental to securities trading activities.

CPO is provided relief from certain reporting and disclosure requirements under CFTC Regulations 4.12, 4.22, and 4.24.

• Select the name of the pool for which the exemption will be filed.
• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the CPO.
• Must represent that the CPO and pool will operate in compliance with 4.12(b)(1)(i) and comply with (b)(1)(ii).
• Must be filed by a representative duly authorized to bind the CPO.

Exemption is processed through NFA's Exemptions System. This exemption is filed under the Pool Exemptions section on the Filing Index page.

Must be filed before the date the commodity pool first enters into a commodity interest transaction.

No annual affirmation is required.

A registered CPO that operates a pool where the following applies:

• The pool will be offered and sold pursuant to Securities Act of 1933.
• The pool is listed for trading on a national securities exchange.

• CPO is provided relief from (1) Disclosure Document delivery and acknowledgement requirements and (2) Account Statement delivery requirements.
• However, (a) the pool's Disclosure Document must be readily accessible on a website maintained by the CPO, the address of which must be provided to clients by the CPO, broker, dealer or selling agent and (b) the pool's Account Statements must be readily accessible on a website maintained by the CPO within 30 calendar days after the last day of the applicable reporting period.
• Furthermore, the Disclosure Document must comply with all other requirements applicable to pool Disclosure Documents under Part 4 and clearly indicate the website address where information required to be in the Account Statement will be readily accessible.

• Select the name of the pool for which the exemption will be filed.
• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the CPO.
• Must represent that the CPO and pool will operate in compliance with CFTC Regulation 4.12(c)(1) and comply with (c)(2).
• Must be filed by a representative duly authorized to bind the CPO.

Exemption is processed through NFA's Exemptions System. This exemption is filed under the Pool Exemptions section on the Filing Index page.

Must be filed before the date the commodity pool first enters into a commodity interest transaction.

No annual affirmation is required.

A registered CPO that operates a pool that is registered under the Investment Company Act of 1940.

• CPO is provided relief from disclosure document requirements under CFTC Regulations 4.21, 4.24, 4.25 and 4.26; provided, that:
  1. An offered pool with less than 3 years of operating history must disclose the performance of all accounts and pools that are managed by the CPO with substantially similar objectives, polices, and strategies to the offered pool and
  2. The offered pool complies with disclosure provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940.
• CPO is provided relief from the Account Statement distribution requirements under 4.22(a) and (b); provided, that:
  1. The current NAV per share is made available to participants and
  2. The pool clearly indicates the website address where the current NAV per share will be readily accessible to participants.
• CPO is provided relief from the requirement under 4.23 to make available to participants for inspection and/or copying the CPO's books and records.

• Select the name of the pool for which the exemption will be filed.
• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the CPO.
• Must represent that the CPO and pool will operate in compliance with CFTC Regulation 4.12(c)(1) and comply with (c)(2).
• Must be filed by a representative duly authorized to bind the CPO.

Exemption is processed through NFA's Exemptions System. This exemption is filed under the Pool Exemptions section on the Filing Index page.

Must be filed before the date the commodity pool first enters into a commodity interest transaction.

No annual affirmation is required.

A director or trustee of an ETF operated by a registered CPO.

• Provides relief to a person acting as a director or trustee with respect to a pool that is operated by a registered CPO and is eligible for relief under CFTC Regulation 4.12(c)(2); provided that:
  1. The person acts solely to comply with SEC rules and exchange listing requirements that require the pool to have an audit committee comprised of independent directors or trustees,
  2. The person has no power of authority to manage or control the operations or activities of the pool, and
  3. The registered CPO of the pool is and will be liable for any violations of the Commodity Exchange Act or CFTC regulations by the person in connection with the person's serving as a director or trustee.

• Select the name of the pool for which the exemption will be filed.
• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the person claiming the exemption.
• Must attest that neither the person nor any of its principals has in its background a statutory disqualification that would require disclosure under Section 8a(2) of the Commodity Exchange Act, if such person sought registration, unless such disqualification arises from a matter which was disposed in connection with a previous application for registration, where such registration was granted.
• Must be filed by a representative duly authorized to bind the CPO.

Exemption is processed through NFA's Exemptions System. This exemption is filed under the Pool Exemptions section on the Filing Index page.

Must be filed by the later of the effective date of the pool's registration statement under the Securities Act of 1933 or the date on which the person first becomes a director or trustee of the pool.

Within 60 days of calendar year end, must either:

• Affirm the notice of exemption from registration,
• Withdraw such exemption due to the cessation of activities requiring registration or exemption therefrom, or
• Withdraw such exemption and apply for registration.

Note: Failure to affirm the exemption will result in the exemption being withdrawn after the 60 day period has ended. For non-registrants, the withdrawal of the exemption may subject you to enforcement action by the CFTC.

A registered U.S. CPO that operates offshore pools that only accept non-U.S. participants.

• Registered U.S. CPO is provided relief from certain disclosure, reporting and recordkeeping requirements under CFTC Regulations 4.21, 4.22 and 4.23(a)(10) and (a)(11). Also, provides relief from the location of books and records requirement under 4.23.
• To qualify for relief the commodity pool:
  1. Must be and will remain organized and operated outside of the U.S.,
  2. Will not hold meetings or conduct administrative activities within the U.S.,
  3. Will not receive, hold or invest any capital directly or indirectly contributed from sources within the U.S., and
  4. The CPO and any affiliated persons will not market the pool to U.S. persons.

• Select the name of the pool for which the exemption will be filed.
• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the CPO.
• Must specify by rule reference relief that the CPO is seeking on behalf of the pool and specify that it will operate in compliance with the Advisory.
• Must attest that neither the person nor any of its principals is subject to any statutory disqualifications under Section 8a(2) and 8a(3) of the Commodity Exchange Act unless such disqualification arises from a matter which was disclosed in connection with a previous application for registration where such registration was granted or which was disclosed more than 30 days prior to the filing of this exemption.
• Must be signed by the CPO as follows: if a sole proprietorship, by the sole proprietor; if a partnership, by a general partner; and if a corporation, by the chief executive officer or chief financial officer.

Hardcopy of the Exemption Notice must be sent to NFA. It can also be emailed to the Exemptions mailbox: Exemptions@nfa.futures.org.

Must be filed prior to the date upon which the CPO filing such notice intends to operate the pool pursuant to the terms of the relief.

No annual affirmation is required.

A registered CPO.

• CPO is provided relief from maintaining books and records at its main business office. Books and records can be maintained by third-party recordkeepers that are (a) the pool's administrator, (b) the pool's distributor, (c) the pool's custodian, or (d) a bank or registered broker or dealer acting in a similar capacity to an administrator, distributor, or custodian with respect to the pool.
• However, (1) books and records must be made available to a representative of the CFTC for inspection within 48 hours at main business office or within 72 hours if books and records are located outside the U.S., (2) the CPO remains responsible for ensuring all books and records required in CFTC Regulation 4.23 are kept in accordance with 1.31, and (3) disclosure of the location of books and records must be made in the CPO's disclosure document, if any.

• Provide the following: name, main business address, main business telephone, main FAX number, and main email address of the CPO.
• Must identify each alternative recordkeeper, provide the main business address and main business telephone number of each recordkeeper, and provide the name and telephone number of a contact person for each recordkeeper.
• Must specify by rule reference the books and records that will be maintained with each third-party recordkeeper.
• Must electronically file with NFA a statement from each person who will be keeping required books and records. The statement must acknowledge that the person will keep and maintain required books and records for the pool and will keep them in accordance with 1.31 and will make such books and records available for inspection by a representative of the CFTC, NFA or the U.S. Department of Justice.
• CPO must select the pools for which the exemption will be filed. If the CPO wishes to claim this exemption on the firm's behalf, it must file a firm level exemption for the CPO under 4.23(c).
• Must be filed by a representative duly authorized to bind the CPO.

Note: If the contact information or location of any of the books and records required under 4.23 changes, then the notice of exemption must be promptly amended.

Exemption is processed through NFA's Exemptions System. This exemption may be filed both under the Firm Exemptions section on the Filing Index page for the CPO and under the Pool Exemptions section for the pool.

Must be filed at the time the CPO registers or delegates its recordkeeping obligations, whichever is later.

No annual affirmation is required.