The Division of Clearing and Intermediary Oversight took a CPO registration no-action position with respect to the trustee of a commodity pool where the trustee had no authority to perform CPO functions, and a separat...

Summary: The Division of Clearing and Intermediary Oversight took a CPO registration no-action position with respect to the trustee of a commodity pool where the trustee had no authority to perform CPO functions, and a separate registered CPO was authorized to perform such functions. The Division further granted exemptive relief from certain of the Part 4 regulations to the registered CPO of a commodity pool, whose shares the CPO intended to publicly offer and to list for trading on a national securities exchange. As is discussed in the letter, this relief was in the nature of substituted compliance with those regulations. Finally, the Division granted exemptive relief from certain of the Part 4 regulations to the registered CTA of a commodity pool where the CTA was an affiliate of the pool’s CPO.

U.S. COMMODITY FUTURES TRADING COMMISSION

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5430

Facsimile: (202) 418-5547

aradhakrishnan@cftc.gov

Division of Clearing and

Intermediary Oversight

CFTC Letter No. 09-39

Ananda Radhakrishnan

Director

No-Action and Exemption

July 30, 2009

Division of Clearing and Intermediary Oversight

Re:

Section 4m(1)

Request for exemption from requirement to register as a commodity pool operator

Regulations 4.21, 4.22 and 4.23

Request for exemption from certain Disclosure Document, reporting and

recordkeeping requirements in connection with the operation of the Fund.

Regulations 4.31 and 4.36

Request for exemption from Disclosure Document requirements in connection

with advising the Fund.

Dear :

This is in response to your letter dated June 22, 2009, to the Division of Clearing and

Intermediary Oversight (the “Division”) of the Commodity Futures Trading Commission (the

“Commission”), as supplemented by subsequent e-mail messages1 (the “correspondence”)

ection

with advising the Fund.

Dear :

This is in response to your letter dated June 22, 2009, to the Division of Clearing and

Intermediary Oversight (the “Division”) of the Commodity Futures Trading Commission (the

“Commission”), as supplemented by subsequent e-mail messages1 (the “correspondence”). By

the correspondence, you request, on behalf of “A” exemption from the requirement under

Section 4m(1) of the Commodity Exchange Act (the “Act”)2 to register as a commodity pool

operator (“CPO”) in connection with serving as trustee of (the “Fund”). You further request, on

behalf of “B”, a registered CPO, exemption from certain provisions of Commission Regulations

4.21, 4.22, and 4.23, which concern, respectively, the disclosure, reporting and recordkeeping

requirements applicable to registered CPOs, in connection with “B” serving as the registered

CPO of the Fund.3 Finally, you request, on behalf of “C”, a registered commodity trading

advisor (“CTA”), relief from Regulations 4.31 and 4.36, which concern, respectively, Disclosure

1

Specifically, those e-mail messages were dated June 29, 2009 and July 7, 2009.

2

7 U.S.C. §1, et seq. (2000). The Act may be accessed through the Commission’s website,

at: http://www.cftc.gov/.

3

Commission regulations referred to in this letter are found at 17 C.F.R. Ch. I (2009). The

regulations may also be accessed through the Commission’s website, at: http://www.cftc.gov/.

1

Specifically, those e-mail messages were dated June 29, 2009 and July 7, 2009.

2

7 U.S.C. §1, et seq. (2000). The Act may be accessed through the Commission’s website,

at: http://www.cftc.gov/.

3

Commission regulations referred to in this letter are found at 17 C.F.R. Ch. I (2009). The

regulations may also be accessed through the Commission’s website, at: http://www.cftc.gov/.

Page 2

Document delivery and filing requirements applicable to registered CTAs, in connection with

“C” serving as the registered CTA of the Fund.4

Background

Based upon the representations made in the correspondence, we understand the relevant

facts to be as follows. Interests (“Shares”) in the Fund will be offered and sold to the public,

pursuant to an effective registration statement filed with the Securities and Exchange

Commission (“SEC”) (the “Registration Statement”).5 The Shares of the Fund will be both

publicly-offered and listed for trading on NYSE Arca (the “Exchange”), and it is this latter fact

that causes “B” to seek the requested exemption.6

The Fund will be operated in a manner substantially similar to an exchange-traded fund,

or ETF. Among other things, the Fund will trade foreign currency forward contracts and

exchange-traded futures contracts that may involve physical commodities, currencies, interest

rates and stock or bond indices.7 The Fund will not seek to track the performance of any index

or other benchmark.

Shares will be issued only in one or more blocks of Shares (“Baskets”), and in the first

instance, only to an initial purchaser, anticipated to be (the “Initial Purchaser”), a registered

broker-dealer and affiliate of “B”. The Initial Purchaser will purchase Baskets in advance of the

4

You initially requested this relief also in connection with the operation and advising of

unnamed “future funds” as discussed more fully in your June 22, 2009 letter

n initial purchaser, anticipated to be (the “Initial Purchaser”), a registered

broker-dealer and affiliate of “B”. The Initial Purchaser will purchase Baskets in advance of the

4

You initially requested this relief also in connection with the operation and advising of

unnamed “future funds” as discussed more fully in your June 22, 2009 letter. However, by your

June 29, 2009 e-mail message, you withdrew that portion of your request.

5

Prior to making the instant request, “B” filed the relevant offering materials for review

with both the National Futures Association (“NFA”) and the SEC.

6

Your request assumes, and the Registration Statement states, that the Shares constitute

securities for purposes of the U.S. federal securities laws and will be offered, sold and transferred

as such. While we may not necessarily agree with your categorization on this issue, the Division

will not recommend that the Commission commence any enforcement action against a Fund or

market participants in connection with the offer, sale and transfer of Shares in the manner

contemplated by your request and the Disclosure Document for the Fund.

Further, we note that Exchange listing will not affect “B’s” obligation to comply with any

other provision of the Act or the Commission’s regulations issued thereunder applicable to CPOs

in particular or to persons in general.

7

For example, the Registration Statement states that the Fund “may enter into foreign

currency forward contracts which will primarily involve currencies in the twenty-five most liquid

or actively-traded currencies as measured by turnover in the most recent Triennial Central Bank

Survey of Foreign Exchange and Derivatives Market Activity coordinated by the Bank for

International Settlements.”

For example, the Registration Statement states that the Fund “may enter into foreign

currency forward contracts which will primarily involve currencies in the twenty-five most liquid

or actively-traded currencies as measured by turnover in the most recent Triennial Central Bank

Survey of Foreign Exchange and Derivatives Market Activity coordinated by the Bank for

International Settlements.”

Page 3

effective date of the Registration Statement (the “Effective Date”). Prior to the Effective Date,

the Initial Purchaser will not solicit or actively seek purchasers for Shares, and no person (other

than the Initial Purchaser) will have any opportunity to purchase Shares prior to effectiveness of

the Registration Statement and the listing of the Shares on the Exchange.8 Subsequent to

effectiveness of the Registration Statement, the Initial Purchaser will accept and fill orders and

make an orderly market for the Shares. Additionally, the Fund may sell Baskets to “Authorized

Participants” (certain registered broker-dealers who are also participants in the Depository Trust

Corporation (“DTC”)), rather than directly to the public.

Investors will be able to purchase Shares in different contexts, then. First, upon

effectiveness of the Registration Statement, from the Initial Purchaser, or if Authorized

Participants decide to create additional Baskets, investors may purchase Shares from those

Baskets. Second, investors may purchase Shares on the Exchange in the secondary market.

“C” will serve as the Fund’s CTA. “C” and “B” (the Fund’s CPO) are both indirect

subsidiaries of “D”, and as such, they share several principals. Currently, “C” provides

commodity interest trading advice pursuant to a claim of exemption under Regulation 4.7.9 As

such, it is not required to prepare and deliver a Disclosure Document to its prospective clients,

nor is it required to file a Disclosure Document with NFA

d’s CTA. “C” and “B” (the Fund’s CPO) are both indirect

subsidiaries of “D”, and as such, they share several principals. Currently, “C” provides

commodity interest trading advice pursuant to a claim of exemption under Regulation 4.7.9 As

such, it is not required to prepare and deliver a Disclosure Document to its prospective clients,

nor is it required to file a Disclosure Document with NFA.

Discussion

Section 4m(1)

Commission staff previously has taken the position that where a commodity pool is

organized as a trust, each trustee of the pool is a CPO and, absent relief, would be required to

register as a CPO under Section 4m(1) of the Act.10 In support of your request that “B”, and not

“A”, serve as the CPO of the Fund, you represent that pursuant to the Trust Agreement (“Trust

8

There will be no “road show” or other selling effort with respect to the Shares prior to the

Registration Statement’s effectiveness and the Shares’ listing on the Exchange.

9

Regulation 4.7 makes available an exemption from CTA Disclosure Document and

recordkeeping requirements where a CTA advises only “qualified eligible persons” (“QEPs”) as

that term is defined in the regulation.

To date, “C” has advised only QEPs. It filed a notice of claim of exemption under

Regulation 4.7 on August 9, 1993.

10

See CFTC Staff Letter 86-8 [1986-1987 Transfer Binder] Comm. Fut. L. Rep. (CCH)

¶23,014 (Apr. 4, 1986) (two trustees of a master trust, who would otherwise be required to

register as CPOs, granted registration relief because underlying trusts would have each been

excluded from the definition of CPO under Regulation 4.5).

e of claim of exemption under

Regulation 4.7 on August 9, 1993.

10

See CFTC Staff Letter 86-8 [1986-1987 Transfer Binder] Comm. Fut. L. Rep. (CCH)

¶23,014 (Apr. 4, 1986) (two trustees of a master trust, who would otherwise be required to

register as CPOs, granted registration relief because underlying trusts would have each been

excluded from the definition of CPO under Regulation 4.5).

Page 4

t

Agreement”) that will be entered among “B”, “A” and “E”, a Delaware banking company,11

“A”, as trustee will be responsible only for certain day-to-day administrative matters with respec

to the Fund.12

Pursuant to the Trust Agreement, “B”, as the Fund’s CPO, has the authority to direct “A”

in the administration of the Fund. To the extent that “A”, as trustee, has any authority under the

Trust Agreement, it is expected that “B” will direct “A” as to such matters and accordingly that

“A” will not exercise independent discretion over the Fund and its assets. “B” will also have

exclusive authority to remove “A” as the trustee of the Fund at any time after the first

anniversary of the date of the Trust Agreement and to replace “A” if it is so removed or

otherwise resigns.

In further support of this request, you state that you have been advised that neither “A”,

any of its directors, any of its senior management nor any holder of a 10 percent or greater

interest in “A” is currently subject to a statutory disqualification under Section 8a(2) or 8a(3) of

the Act.

Regulation 4.21

Regulation 4.21(a) requires each registered CPO to deliver a Disclosure Document to

prospective pool participants at or before the time the CPO delivers a subscription agreement for

the pool. Regulation 4.21(b) requires the CPO to obtain a signed and dated acknowledgment that

a prospective pool participant has received a Disclosure Document before the CPO may accept

money or other property in exchange for shares or other units of interest in the pool

a Disclosure Document to

prospective pool participants at or before the time the CPO delivers a subscription agreement for

the pool. Regulation 4.21(b) requires the CPO to obtain a signed and dated acknowledgment that

a prospective pool participant has received a Disclosure Document before the CPO may accept

money or other property in exchange for shares or other units of interest in the pool. The

purpose of the regulation is “to protect pool participants – particularly those who are

11

You state that “E” will serve as the Delaware trustee for the Fund. Under the Trust

Agreement, “E” will not be entitled to exercise any powers or have any of the duties and

responsibilities that are subject to the Act or the Commission’s regulations. “E” will have the

sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Statutory

Trust Act (the “Delaware Act”) and for taking such actions as are required to be taken by a

Delaware trustee under the Delaware Act. The duties (including fiduciary duties), liabilities and

obligations of “E” will be limited to (i) accepting legal process served on the Trust in the State of

Delaware and (ii) executing any certificates required to be filed with the Delaware Secretary of

State that “E”, in its capacity as the Fund’s Delaware Trustee, is required to execute under

Section 3811 of the Delaware Act.

12

These include (1) processing orders for the creation and redemption of Baskets, (2)

coordinating with “B”, in its capacity as sponsor of the Trust, as to receipt and delivery of

consideration in connection with the creation and redemption of baskets, (3) calculating the net

asset value of the Trust and the Shares on each Business Day, (4) calculating net income and

realized capital gains and losses for the Trust, (5) administering payment by the Trust of various

expenses and other amounts and (6) maintaining certain books and records.

t, as to receipt and delivery of

consideration in connection with the creation and redemption of baskets, (3) calculating the net

asset value of the Trust and the Shares on each Business Day, (4) calculating net income and

realized capital gains and losses for the Trust, (5) administering payment by the Trust of various

expenses and other amounts and (6) maintaining certain books and records.

Page 5

unsophisticated in financial matters – by ensuring that they are informed about the material facts

regarding the pool before they commit their funds.”13

You request exemption from the Disclosure Document delivery requirement of

Regulation 4.21 in the case of sales by the Initial Purchaser to the public and to the extent, if any,

that Authorized Participants may subsequently create additional Baskets and sell those Shares to

the public. In support of your request for exemption, you state that the Internet websites

maintained by “B” and the Exchange (the “Website Sources”) will contain a current Disclosure

Document for the Fund. You further state that “B” expects that prospective or actual investors

will utilize the services of a registered broker-dealer, who will either inform them where they can

obtain the current Disclosure Document, or, upon request, will deliver a copy of the current

Disclosure Document.14

With respect to secondary market purchases on the Exchange, you conclude that “B” is

not subject to Regulation 4.21. The Division agrees with this conclusion.15

Regulations 4.22(a) and (b)

Regulation 4.22(a) requires a registered CPO to distribute to pool participants periodic

unaudited Account Statements, which must include, among other information, Statements of

Income (Loss) and of Changes in Net Asset Value. Regulation 4.22(b) provides that Account

Statements be distributed monthly for pools with net assets of more than $500,000 and otherwise

13

44 Fed. Reg. 1918, 1920 (Jan. 8, 1979)

2(a) requires a registered CPO to distribute to pool participants periodic

unaudited Account Statements, which must include, among other information, Statements of

Income (Loss) and of Changes in Net Asset Value. Regulation 4.22(b) provides that Account

Statements be distributed monthly for pools with net assets of more than $500,000 and otherwise

13

44 Fed. Reg. 1918, 1920 (Jan. 8, 1979).

14

The only instances where the services of a registered broker-dealer would not be utilized

would be where an investor has an account with a bank or trust company that is exempt from the

requirement to register as a broker-dealer.

15

The CPO’s obligation to deliver a Disclosure Document (and the requirement to obtain a

signed acknowledgment of receipt) extends to the direct purchaser of units of participation, and

not to persons who purchase from that purchaser. In this regard, the Commission has stated that,

with respect to the transfer of a participation unit in a commodity pool, the CPO of the pool “is

not required to provide a Disclosure Document (Rule 4.21) to a person who purchases a unit of

participation or interest in the pool from a pool participant if the pool operator did not solicit the

purchase.” 44 Fed. Reg. 25658, 25659 (May 2, 1979).

Page 6

y

sis.

at least quarterly.16 The purpose of these rules is to “ensure that participants have a reasonably

current knowledge of the pool’s trading performance and operating costs.”17

An issuer of exchange-traded shares held in book-entry form through DTC (such as the

Fund) typically does not readily know the identities of its ultimate beneficial owners

at least quarterly.16 The purpose of these rules is to “ensure that participants have a reasonably

current knowledge of the pool’s trading performance and operating costs.”17

An issuer of exchange-traded shares held in book-entry form through DTC (such as the

Fund) typically does not readily know the identities of its ultimate beneficial owners. You

request exemption from the Account Statement distribution requirement on the grounds that it

would be unduly burdensome and costly to require “B” to ascertain on a monthly basis the

identities of purchasers of Shares in the secondary market in order to comply with the

requirement under Rules 4.22(a) and (b) to distribute monthly Account Statements to participants

in each Fund.18 In this regard, you explain that, because of the secondary market for each

Fund’s shares on the Exchange, ownership of a Fund’s shares is expected to change frequentl

on a daily ba

In support of your request, you note that the same information that would otherwise be

provided in each Fund’s monthly Account Statements, including the Fund’s net asset value via

the Website Sources, and that monthly and annual reports conforming to the from and content

requirements of Regulation 4.22, including the certification required by Regulation 4.22(h), will

be posted on the Fund’s website, of which availability the Disclosure Document will advise

participants.19

Regulation 4.23

Rule 4.23 specifies the types of books and records a registered CPO must make in the

course of operating a pool, and requires that those books and records be kept at the CPO’s main

16

Regulation 4.22(c) requires a registered CPO to distribute a certified Annual Report to

pool participants. You have not requested exemption from Regulation 4.22(c) in connection

with the operation of the Fund, and, in fact, you represent that “B” will comply with Regulation

4.22(c) in connection with its operation of the Fund

uires that those books and records be kept at the CPO’s main

16

Regulation 4.22(c) requires a registered CPO to distribute a certified Annual Report to

pool participants. You have not requested exemption from Regulation 4.22(c) in connection

with the operation of the Fund, and, in fact, you represent that “B” will comply with Regulation

4.22(c) in connection with its operation of the Fund. Distribution of the Annual Report is

required once a year, whereas distribution of monthly Account Statements requires continuous

monitoring of changes in ownership of shares.

17

44 Fed. Reg. at 1922 (Jan. 8, 1979).

18

We understand that you make this request not only with respect to investors purchasing

Shares in the secondary market, but also with respect to purchasers from the Initial Purchaser or

from an Authorized Participant. Once an investor has purchased Shares, whether directly from

the Initial Purchaser, from an Authorized Participant, or on the Exchange, the Shares can be

freely sold on the secondary market, and the same difficulties will be encountered in tracking the

current owner.

19

Pursuant to Regulation 4.22(h), a representative duly authorized to bind the CPO must

sign an oath or affirmation that, to the best of the knowledge and belief of the individual making

the oath or affirmation, the information contained in the Account Statement is accurate and

complete.

Page 7

business office. The books and records must be available to pool participants for inspection and

copying during normal business hours, and must be open and available for inspection by any

representative of the Commission or the United States Department of Justice

on contained in the Account Statement is accurate and

complete.

Page 7

business office. The books and records must be available to pool participants for inspection and

copying during normal business hours, and must be open and available for inspection by any

representative of the Commission or the United States Department of Justice. The purpose of the

regulation is “to enable pool participants and the Commission to ascertain whether the CPO is

dealing properly with pool funds.”20

You request exemption from the location requirement of Regulation 4.23(a) such that

books and records of the Fund may be kept at the offices of “A”; a Massachusetts banking

corporation (the “Trust Administrator”); and a Pennsylvania corporation (the “Processing

Agent”) at their respective addresses as specified in your June 22, 2009 letter.21

You further ask for confirmation that neither “A”, the Trust Administrator nor the

Processing Agent will be deemed to be acting as a CPO solely by reason of keeping Fund

records in the manner described in your correspondence, which the Division hereby so confirms.

In this regard, the Division notes that neither firm will be acting in the manner contemplated by

the statutory definition of a “commodity pool operator” – e.g., neither will be promoting the

Fund by soliciting, accepting or receiving from others property for the purpose of commodity

interest trading, and neither will have the authority to hire (and to fire) the Fund’s commodity

trading advisor, and to select (and to change) the Fund’s futures commission merchant.22

Regulations 4.31 and 4.36

Regulations 4.31 and 4.36 respectively require each registered CTA to provide a

Disclosure Document for the trading program pursuant to which the advisor seeks to direct or

guide a prospective client’s account to the prospective client by no later than the time the CTA

delivers to the prospective client the advisory agreement, and to file the Disclosure Docu

t.22

Regulations 4.31 and 4.36

Regulations 4.31 and 4.36 respectively require each registered CTA to provide a

Disclosure Document for the trading program pursuant to which the advisor seeks to direct or

guide a prospective client’s account to the prospective client by no later than the time the CTA

delivers to the prospective client the advisory agreement, and to file the Disclosure Document

with NFA. Where the CTA’s prospective client is a commodity pool, the CTA provides the

Disclosure Document to the CPO of the pool. In turn, the CPO utilizes the information in the

20

44 Fed. Reg. at 1922.

21

Each of “A”, the Trust Administrator and the Processing Agent has provided the Division

with signed acknowledgments that the books and records of the Fund may be inspected and

copied by any representative of the Commission or the United States Department of Justice and

may be inspected and copied during normal business hours by Fund participants. Your June 22,

2009 letter specifies the classes of books and records, by subparagraph of Regulation 4.23, that

each of “A”, the Trust Administrator and the Processing Agent will be keeping.

22

See, e.g., 49 Fed. Reg. 4778, 4780 (Feb. 2, 1984) (Commission acknowledged staff

practice of employing these criteria in determining whether a person is, or is not, a CPO); and

CFTC Staff Letter No. 06-27 [2005-2007 Transfer Binder] Comm. Fut. L. Rep. (CCH) ¶30,397

(Sep. 26, 2006) (Division granted a CPO an exemption to keep pool books and records with the

pool’s administrator and its distributor, neither of which was thereby deemed to be acting as a

CPO of the pool.)

ff

practice of employing these criteria in determining whether a person is, or is not, a CPO); and

CFTC Staff Letter No. 06-27 [2005-2007 Transfer Binder] Comm. Fut. L. Rep. (CCH) ¶30,397

(Sep. 26, 2006) (Division granted a CPO an exemption to keep pool books and records with the

pool’s administrator and its distributor, neither of which was thereby deemed to be acting as a

CPO of the pool.)

Page 8

CTA’s Document in preparing the Disclosure Document that the CPO delivers to prospective

participants in its pool. However, although “C” is a registered CTA, because it has claimed

exemption under Regulation 4.7 from the requirements of Regulation 4.31, “C” is not currently

required to prepare and deliver a Disclosure Document.23

Thus, you have requested relief from Regulations 4.31 and 4.36, such that “C” would not

have to deliver a Disclosure Document to “B”, its corporate affiliate. In support of your request,

you note that: (1) “B” and “C” are both indirect subsidiaries of “D”; and (2) they share certain

management personnel. In further support of your request, you represent that “C” will make

available to “B” all of the information that “B” needs in order to prepare the Fund’s Disclosure

Document in accordance with Regulation 4.21.

Conclusion

Based upon the representations made in the correspondence, the Division believes that

granting your request would not be contrary to the public interest and to the purposes of the Act

and the regulations at issue. Accordingly, the Division will not recommend that the Commission

take any enforcement action against “A” for failure to comply with Section 4m(1) of the Act,

based solely upon an “A’s” failure to register as a CPO in connection with serving as trustee of

the Fund, provided that “B” serves as the CPO of the Fund

o the public interest and to the purposes of the Act

and the regulations at issue. Accordingly, the Division will not recommend that the Commission

take any enforcement action against “A” for failure to comply with Section 4m(1) of the Act,

based solely upon an “A’s” failure to register as a CPO in connection with serving as trustee of

the Fund, provided that “B” serves as the CPO of the Fund. This position is, however, subject to

the following conditions: (1) “B” remains registered as a CPO; and (2) neither “A” nor any

present or future principal of “A” is subject to any statutory disqualification under Section 8a(2)

or 8a(3) of the Act.

Further, pursuant to the authority delegated in Regulation 140.93(a)(1), the Division

hereby exempts “B” in connection with the operation of the Fund from: (1) the requirement of

Regulation 4.21(b) to obtain a signed acknowledgment of receipt of a Disclosure Document

before accepting funds, securities or property from a prospective pool participant with respect to

sales of Shares by the Initial Purchaser and by Authorized Participants when Authorized

Participants create additional Baskets, subsequent to effectiveness of the Registration Statement,

provided that the information required to be contained in the Disclosure Document is maintained

and kept current on the Website Sources; (2) the requirement of Regulation 4.22 to distribute

monthly Account Statements to purchasers of Shares, provided that the information that would

otherwise be contained in such reports is maintained on the Fund’s website; and (3) the

requirement of Regulation 4.23 to keep required books and records at “B’s” main business office

to the extent that such books and records are maintained at the offices of “A”, the Trust

Administrator or the Processing Agent

Account Statements to purchasers of Shares, provided that the information that would

otherwise be contained in such reports is maintained on the Fund’s website; and (3) the

requirement of Regulation 4.23 to keep required books and records at “B’s” main business office

to the extent that such books and records are maintained at the offices of “A”, the Trust

Administrator or the Processing Agent.

Consistent with prior practice,24 the exemption from the books and records location

requirement of Regulation 4.23 is subject to the conditions that: (1) “B” notify the Division if

23

See n. 9, supra.

24

See, e.g., Staff Letter 06-27.

Page 9

the location of any of the books and records required to be kept by Regulation 4.23 changes from

that as represented to the Division; (2) “B” remain responsible for ensuring that all books and

records required by Regulation 4.23 are kept in accordance with Regulation 1.31 and for assuring

the availability of such books and records to the Commission, NFA, and any other agency

authorized to review such books and records in accordance with the Act and Commission

regulations; (3) within forty-eight hours after a request by a representative of the foregoing, “B”

obtain the original books and records from the offices of “A”, the Trust Administrator, or the

Processing Agent, as the case may be, and will provide them for inspection at “B’s” main

business office in “F”; (4) “B” disclose in the Fund’s Disclosure Document the location of its

books and records that are required under Regulation 4.23; and (5) “B” remain fully responsible

for compliance with Regulation 4.23.

Finally, pursuant to the authority delegated in Regulation 140.93(a)(1), the Division

hereby exempts “C” from the Disclosure Document requirements of Regulation 4.31 and 4.36 in

connection with providing commodity interest trading advice to the Fund

ion of its

books and records that are required under Regulation 4.23; and (5) “B” remain fully responsible

for compliance with Regulation 4.23.

Finally, pursuant to the authority delegated in Regulation 140.93(a)(1), the Division

hereby exempts “C” from the Disclosure Document requirements of Regulation 4.31 and 4.36 in

connection with providing commodity interest trading advice to the Fund.

This letter relieves “A” from registration as a CPO under Section 4m(1) of the Act, “B”

from Regulations 4.21, 4.22 and 4.23, and “C” from Regulations 4.31 and 4.36, as stated above.

It does not excuse “A”, “B” or “C” from compliance with any other aspect of the Commission’s

disclosure, reporting and recordkeeping requirements for registered CPOs and CTAs, nor does it

excuse “B” or “C” from compliance with any other applicable requirements contained in the Act

or in the Commission’s regulations issued thereunder. For example, “B” and “C” remain subject

to Regulation 1.31, and the Commission maintains its right under that regulation to inspect the

required books and records of “B” at the offices of “A”, the Trust Administrator, or the

Processing Agent at the addresses provided in the correspondence. Additionally, “A”, “B” and

“C” remain subject to all antifraud provisions of the Act and the Commission’s regulations, to

the reporting requirements for traders set forth in Parts 15, 18 and 19 of the Commission’s

regulations, and to all other applicable provisions of Part 4.

This letter is based upon the representations made to us and is subject to compliance with

the conditions set forth above. Any different, changed or omitted material facts or circumstances

might render this letter, the no-action position taken herein, and the exemptions granted herein

void. In this connection, you must notify us immediately in the event that the operations of “B”,

“A”, “C” or the Fund change in any material way from those represented to us.

t to compliance with

the conditions set forth above. Any different, changed or omitted material facts or circumstances

might render this letter, the no-action position taken herein, and the exemptions granted herein

void. In this connection, you must notify us immediately in the event that the operations of “B”,

“A”, “C” or the Fund change in any material way from those represented to us.

Page 10

If you have any questions concerning this correspondence, please contact me or

Christopher W. Cummings, Special Counsel, at (202) 418-5445.

Very truly yours,

Ananda Radhakrishnan

Director