The Division of Clearing and Intermediary Oversight provided exemptive relief to a registered CPO and CTA from the books and records location requirements of Rules 4.23 and 4.33 such that the CPO/CTA may maintain its...

Summary: The Division of Clearing and Intermediary Oversight provided exemptive relief to a registered CPO and CTA from the books and records location requirements of Rules 4.23 and 4.33 such that the CPO/CTA may maintain its books and records at a branch office (also the main business office of an affiliated company) that provides operational support to the CPO/CTA.

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

Ananda Radhakrishnan

Director

CFTC Letter No. 10-37

Exemption

November 17, 2010

Division of Clearing and Intermediary Oversight

Re: Regulations 4.23 and 4.33 – Request for Exemption from Books and Records

Location Requirement

Dear :

This is in response to your letter dated October 4, 2010 to the Division of Clearing and

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

“Commission”). By your letter, you seek, on behalf of “A”, a registered commodity pool

operator (“CPO”) and commodity trading advisor (“CTA”), exemption from the requirement set

forth in Commission Regulations 4.23 and 4.33 that a CPO and CTA, respectively, maintain

certain books and records at its main business office and in accordance with Commission

Regulation 1.31.1

Based upon representations made in your letter, we understand the relevant facts to be as

follows. “A” is a Cayman Islands company that maintains its main office in the Cayman

Islands.2 “A” maintains a branch office in Monaco, which is also the location of “B”, a

registered CPO and CTA.3 “A” and “B” are both owned by “C”, and they have common

management and employees, both located in Monaco. “B” provides back office support for “A”,

including market research, daily tracking of positions and other administrative functions

at maintains its main office in the Cayman

Islands.2 “A” maintains a branch office in Monaco, which is also the location of “B”, a

registered CPO and CTA.3 “A” and “B” are both owned by “C”, and they have common

management and employees, both located in Monaco. “B” provides back office support for “A”,

including market research, daily tracking of positions and other administrative functions. You

are requesting that “A” be exempted from the location requirement of Regulations 4.23 and 4.33,

so that “A” may maintain the records required by the regulations at its branch office in Monaco.

Based upon the representations contained in your letter, the Division believes that

granting the requested exemption would not be contrary to the public interest and the purposes of

1

Commission Regulations may be found at www.cftc.gov.

2

The full address of “A’s” office in the Cayman Islands is “D”, Cayman Islands.

3

The full address of “A’s” branch office, which is also “B’s” main office, is “E” Monaco.

Page 2

Regulations 4.23 and 4.33.4 Accordingly, by the authority delegated to it under Commission

Regulation 140.93(a)(1), the Division hereby exempts “A” from the books and records location

requirement of Regulations 4.23 and 4.33, such that it may maintain the books and records

required under these rules at its branch office in Monaco. This relief is, however, subject to the

conditions that: (1) “A” notifies the Division if the location of any books and records required by

Regulations 4.23 and 4.33 changes from that as represented to the Division; (2) “A” remains

responsible for ensuring that all books and records required by Regulations 4.23 and 4.33 are

maintained in accordance with Regulation 1.31 and for assuring the availability of such records

in accordance with the Commodity Exchange Act (the “Act”)5 and Commission regulations; (3)

within forty-eight hours after a request by a representative of the foregoing, “A” will obtain t

n; (2) “A” remains

responsible for ensuring that all books and records required by Regulations 4.23 and 4.33 are

maintained in accordance with Regulation 1.31 and for assuring the availability of such records

in accordance with the Commodity Exchange Act (the “Act”)5 and Commission regulations; (3)

within forty-eight hours after a request by a representative of the foregoing, “A” will obtain the

original books and records from its branch office in Monaco and provide them for inspection at

“A’s” main business office in the Cayman Islands or elsewhere as provided for in Regulations

4.23 and 4.33 (e.g., in the United States); and (4) “A” discloses in its CPO and CTA Disclosure

Documents that all books and records required under Regulations 4.23 and 4.33 are kept in the

branch office in Monaco.

The relief issued by this letter does not excuse “A” from compliance with any other

applicable requirements contained in the Act or in the Commission’s regulations issued

thereunder. For example, “A” remains subject to all antifraud provisions of the Act and the

Commission’s regulations, as well as the reporting requirements for traders set forth in Parts 15,

18 and 19 of the Commission’s regulations, and all applicable provisions of Part 4.

This letter, and the exemption granted herein, is based upon the representations made to

us and is subject to compliance with the conditions stated above. Any different, changed or

omitted material facts or circumstances might render the exemption void. In this regard, you

must notify the Division immediately in the event that the operations or activities of “A” or “B”,

including the location of “A’s” books and records, change in any material respect from those as

represented to us.

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

J. King, an attorney on my staff, at (202) 418-5364.

Very truly yours,

Ananda Radhakrishnan

Director

4

See, CFTC Interpretive Letter No

perations or activities of “A” or “B”,

including the location of “A’s” books and records, change in any material respect from those as

represented to us.

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

J. King, an attorney on my staff, at (202) 418-5364.

Very truly yours,

Ananda Radhakrishnan

Director

4

See, CFTC Interpretive Letter No. 02-20 [2002-2003 Transfer Binder] Comm. Fut. L.

Rep. (CCH) ¶ 28,953 (Feb. 27, 2002); CFTC Interpretive Letter No. 00-60 [1999-2000 Transfer

Binder] Comm. Fut. L. Rep. (CCH) ¶ 28,134 (Apr. 28, 2000).

5

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

at www.cftc.gov.