Electronic Filing of Notices of Exemption and Exclusion Under Part 4 of the Commission's Regulations, 1658-1664 [E7-174]
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Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Docket No. FAA–2006–25905; Airspace
Docket No. 06–AAL–30]
RIN 2120–AA66
Revocation of Low Altitude Reporting
Point; AK
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
SUMMARY: This action revokes the
HERRY as an Alaskan low altitude
reporting point. The FAA has
determined that this reporting point
should be removed from the National
Airspace System (NAS), since the
HERRY is no longer used as a low
altitude reporting point.
DATES: Effective Date: 0901 UTC, March
15, 2007. The Director of Federal
Register approves this incorporation by
reference action under 1 CFR part 51,
subject to the annual revision of FAA
Order 7400.9 and publication of
conforming amendments.
FOR FURTHER INFORMATION CONTACT: Ken
McElroy, Airspace and Rules, Office of
System Operations Airspace and
Aeronautical Information Management,
Federal Aviation Administration, 800
Independence Avenue, SW.,
Washington, DC 20591; telephone: (202)
267–8783.
SUPPLEMENTARY INFORMATION:
Background
In October 2006, it was determined
that the HERRY low altitude reporting
point was no longer required to support
the NAS and is no longer used by the
FAA.
frequent and routine amendments are
necessary to keep them operationally
current. Therefore, this regulation: (1) Is
not a ‘‘significant regulatory action’’
under Executive Order 12866; (2) is not
a ‘‘significant rule’’ under Department of
Transportation (DOT) Regulatory
Policies and Procedures (44 FR 11034;
February 26, 1979); and (3) does not
warrant preparation of a regulatory
evaluation as the anticipated impact is
so minimal. Since this is a routine
matter that will only affect air traffic
procedures and air navigation, it is
certified that this rule, when
promulgated, will not have a significant
economic impact on a substantial
number of small entities under the
criteria of the Regulatory Flexibility Act.
Environmental Review
The FAA has determined that this
action qualifies for categorical exclusion
under the National Environmental
Policy Act in accordance with FAA
Order 1050.1E, paragraph 311(a),
‘‘Environmental Impacts: Policies and
Procedures.’’ This airspace action is not
expected to cause any potentially
significant environmental impacts, and
no extraordinary circumstances exist
that warrant preparation of an
environmental assessment.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference,
Navigation (air).
Adoption of the Amendment
In consideration of the foregoing, the
Federal Aviation Administration
amends 14 CFR part 71 as follows:
I
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
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The Rule
This action amends Title 14 Code of
Federal Regulations (14 CFR) part 71 by
revoking the HERRY low altitude
reporting point. Accordingly, since this
action only involves a change in the
legal description, notice and public
procedure under 5 U.S.C. 533(b) are
unnecessary.
Alaskan low altitude reporting points
are published in paragraph 7004 of FAA
Order 7400.9P dated September 1, 2006,
and effective September 15, 2006, which
is incorporated by reference in 14 CFR
71.1. The low altitude reporting points
listed in this document will be removed
subsequently in the Order.
The FAA has determined that this
regulation only involves an established
body of technical regulations for which
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1. The authority citation for part 71
continues to read as follows:
I
Authority: 49 U.S.C. 106(g), 40103, 40113,
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–
1963 Comp., p. 389.
§ 71.1
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of FAA Order 7400.9P,
Airspace Designations and Reporting
Points, dated September 1, 2006, and
effective September 15, 2006, is
amended as follows:
I
Paragraph 7004 Alaskan Low Altitude
Reporting Points.
*
*
*
*
*
Herry, AK [Revoked]
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Issued in Washington, DC on January 4,
2007.
Edith V. Parish,
Manager, Airspace and Rules.
[FR Doc. E7–317 Filed 1–12–07; 8:45 am]
BILLING CODE 4910–13–P
COMMODITY FUTURES TRADING
COMMISSION
17 CFR Part 4
RIN 3038–AC33
Electronic Filing of Notices of
Exemption and Exclusion Under Part 4
of the Commission’s Regulations
Commodity Futures Trading
Commission.
ACTION: Final rulemaking.
AGENCY:
SUMMARY: The Commodity Futures
Trading Commission (‘‘Commission’’ or
‘‘CFTC’’) is amending Commission
regulations to require that notices of
exemption or exclusion under Part 4 of
the Commission’s regulations submitted
to National Futures Association
(‘‘NFA’’) be filed electronically. Under
the regulations the Commission is
amending, the submission of a notice
through NFA’s electronic exemption
filing system by a person duly
authorized to bind the submitter will be
permitted in lieu of the manual
signature currently required by each of
these regulations.
In addition, the Commission also is
adopting technical amendments that
remove the procedure for making filings
with the Commission required by Part 4,
and revising other sections of Part 4 to
refer to filings made with NFA rather
than the Commission.
DATES: Effective Date: February 15,
2007.
FOR FURTHER INFORMATION CONTACT:
Eileen R. Chotiner, Futures Trading
Specialist, at (202) 418–5467, or Kevin
P. Walek, Assistant Director, at (202)
418–5463, Division of Clearing and
Intermediary Oversight, Commodity
Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street, NW.,
Washington, DC 20581. Electronic mail:
echotiner@cftc.gov or kwalek@cftc.gov.
SUPPLEMENTARY INFORMATION:
I. Background
A. Exemptions and Exclusions Under
Part 4 of the Commission’s Regulations
On October 13, 2006, the Commission
published for public comment proposed
amendments to Part 4 of its regulations.1
1 Commission regulations cited to herein are
found at 17 CFR Ch. I (2006).
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Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations
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Part 4 of the Commission’s regulations
applies to the operation of commodity
pool operators (‘‘CPOs’’) and commodity
trading advisors (‘‘CTAs’’). Generally, a
person who operates a commodity pool
must register with the Commission as a
CPO,2 and a person who manages
clients’ trading must register with the
Commission as a CTA.3 Under
Commission Regulation 4.5, certain
‘‘otherwise regulated persons’’ are
excluded from the CPO definition.
These persons include registered
investment companies, banks and trust
companies, insurance companies, and
fiduciaries of ERISA pension plans. A
person who qualifies for the exclusion
must file a notice of eligibility with
NFA.4
Commission regulations also make
certain exemptions from CPO and CTA
registration available to persons who
meet specified criteria. Regulation 4.13
permits exemption from registration for
CPOs that limit their activities to small
or family pools; or whose participants
are highly sophisticated; or whose pools
limit participants to SEC ‘‘accredited
investors’’ 5 as that term is defined in
the regulations promulgated by the
Securities and Exchange Commission
(‘‘SEC’’) and limit trading of commodity
interests to a minimum amount
specified in the regulation. A notice
claiming exemption from registration as
a CPO must be filed with NFA.
A CTA is exempt from registration if
it meets criteria specified in Regulation
4.14, including: it furnishes trading
advice solely to commodity pools for
which it is the registered CPO or for
which it is exempt from CPO
registration; it provides advice solely
incidental to the conduct of one of
certain businesses or professions listed
in the Act or the Commission’s
regulations; it is registered with the
Commission in another capacity and its
advice is solely in connection with
acting in that other capacity; it does not
manage client accounts or provide
commodity trading advice based on, or
tailored to, the financial positions of
particular clients; or it is an SEC2 Regulation 4.10(d)(1) defines a pool as ‘‘any
investment trust, syndicate or similar form of
enterprise operated for the purpose of trading
commodity interests.’’
3 The Commodity Exchange Act (‘‘Act’’) defines a
CTA as any person who ‘‘for compensation or
profit, engages in the business of advising others
* * * as to the value of or the advisability of
trading in’’ commodity interests. 7 U.S.C. 1a(6)
(2000).
4 NFA is a registered futures association under the
Act. 7 U.S.C. 21 (2000). As discussed below, the
Commission has delegated to NFA the
responsibility for administrating the Commission’s
registration program.
5 17 CFR 230.501(a) (2006).
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registered investment adviser whose
futures advice is incidental to providing
securities trading advice to the
‘‘otherwise regulated’’ trading vehicles
specified in Regulation 4.5, or to CPOs
of pools operated pursuant to the
exemptions in Regulations 4.13(a)(3)
and (4). A notice must be filed to claim
the exemption available to SECregistered investment advisers who
meet the criteria set forth in Regulation
4.14(a)(8); the other exemptions from
CTA registration do not require the
filing of an exemption notice to be
effective.6
Registered CPOs are required to
provide a disclosure document to
prospective participants that includes
disclosure of risks and information such
as the business backgrounds of persons
involved with the pool, investment
objectives, fees, conflicts, material
litigation, and past performance. The
CPO must provide unaudited periodic
reports and certified annual reports on
the pool’s financial operations to the
pool’s participants. Disclosure
documents and annual reports also must
be filed with NFA. Further, the CPO is
required to make and keep specified
books and records for a period of five
years, and make them available for
inspection by the CFTC, NFA, and the
United States Department of Justice.
Registered CTAs must provide to
prospective participants, and file with
NFA, disclosure documents containing
information about their trading
programs, and also must comply with
specified recordkeeping requirements.
The Commission has established a
simplified regulatory framework for
registered CPOs and CTAs who operate
or advise pools and accounts whose
participants meet the criteria specified
in Regulation 4.7. Relief from full
compliance with the disclosure,
reporting, and recordkeeping
requirements is available where, for
example, pool participants are CFTC or
SEC registrants, ‘‘inside employees’’ of
the CPO or CTA, or persons who earn
$200,000 annually and who have assets
worth at least $2 million. A CPO
offering a pool whose futures trading is
incidental to its securities trading and is
limited to 10 percent of the pool’s net
assets may claim exemption from some
disclosure, reporting and recordkeeping
requirements pursuant to Regulation
4.12(b). A person claiming exemption
6 A statutory exemption from CTA registration
exists in Section 4m(1) of the Act for a person who
has not had more than 15 clients during a 12-month
period and is not otherwise holding itself out as a
CTA. 7 U.S.C. 6m (2000). A person who qualifies
for this exemption is not required to file a notice
claiming the exemption.
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under Regulations 4.7 or 4.12(b) must
file a notice with NFA.
In a Notice and Order issued in 1997,7
the Commission authorized NFA to
process: (1) Notices of eligibility for
exclusion from the definition of CPO for
certain otherwise regulated persons,
pursuant to Commission Regulation 4.5;
(2) notices of claim for exemption from
certain Part 4 requirements with respect
to commodity pools and CTAs whose
participants or clients are qualified
eligible persons, pursuant to
Commission Regulation 4.7; (3) claims
of exemption from certain Part 4
requirements for CPOs with respect to
pools that principally trade securities,
pursuant to Commission Regulation
4.12(b); (4) statements of exemption
from registration as a CPO, pursuant to
Commission Regulation 4.13; and (5)
notices of exemption from registration
as a CTA for certain persons registered
with the SEC as an investment adviser,
pursuant to Regulation 4.14(a)(8). The
Commission also made NFA the
custodian of those records.8
B. Electronic Filing of Part 4 Notices
NFA petitioned the Commission to
amend its regulations to require that the
notices required under Regulations 4.5,
4.7, 4.12(b), 4.13, and 4.14(a)(8) be filed
electronically with NFA, and that
submission of a notice by a
representative duly authorized to bind
the person be permitted in lieu of the
manual signature currently specified
under each regulation that requires a
notice filing. After considering the
comments received, the Commission
has determined to amend Regulations
4.5, 4.7, 4.12(b), 4.13, and 4.14(a)(8) as
set forth herein to effectuate this
purpose.
Firms that are registered with the
Commission in any capacity and nonregistrants will both access NFA’s
electronic filing system through the use
of a designated user ID and password.
Registered firms will establish access for
appropriate staff using the security
manager process in place for their
existing Online Registration System
(‘‘ORS’’) accounts, the process that is
currently used for registration and other
electronic filings with NFA.9 In order to
7 62
FR 52088 (October 6, 1997).
the time NFA was authorized to process these
notices, Commission regulations required that
copies of the notices also be filed with the
Commission. In December 2002, the Commission
revised its regulations to require that such notices
be filed solely with NFA. 67 FR 77409 (December
18, 2002).
9 The Commission previously has adopted
amendments to its regulations to enable NFA to
utilize an online system for registration functions
(67 FR 38,869 (June 6, 2002)). The Commission also
8 At
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Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations
enable non-registrants, who are not
required to have ORS accounts, to file
exemption notices, NFA has established
a new process that contains similar
safeguards regarding the identity of the
filers and provides the non-registrant
with the ability to establish one or more
system users. For both registrants and
non-registrants, the person who submits
a notice must be a representative duly
authorized to bind the submitter. The
person or firm that is making the filing,
or on whose behalf the filing is made,
is responsible for ensuring that only
persons who are duly authorized to bind
the filer are granted the ability to submit
notices.
The electronic filing system will
allow filers to select the applicable
exemption type and complete a form
that will provide the information
required for the exemption filing. Each
form contains a statement by the
representative submitting the form that
the information contained therein is
accurate and complete, to the best of his
or her knowledge, and that the
submitter is duly authorized to bind the
person making the claim. Submission of
the electronic form will record the data
regarding the filing in NFA’s database
system. The system also will allow the
filer to create a printer-friendly version
of exemption notices for the filer’s
records.
The amendments will no longer
require persons filing the notices with
NFA to do so in paper form. Therefore,
the Commission has concluded that
electronic transmission of a written
notification to participants, such as by
electronic mail or facsimile, is
consistent with the requirement to
provide the information in writing and
is amending each of the regulations with
a participant notification requirement,
with the exception of Regulation 4.5, to
make explicit that notice may be
delivered through electronic
transmission. In adopting such
amendment, the Commission has
reasoned that the provision of written
notice necessarily requires that the
exemption filer establish with the
participant a method to deliver the
written communication. Should a
participant have provided an email
address or facsimile number to the
exemption filer for the purpose of
receiving communications from that
person, the participant can reasonably
be expected to receive such written
communications from the party,
including the written notification
adopted amendments to its regulations to require
electronic filing of financial statements of
commodity pools (71 FR 8939 (February 22, 2006))
and introducing brokers (71 FR 67462 (November
22, 2006)).
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required under Commission regulations,
through such method of electronic
transmission.
As discussed in the proposal, the
Commission is not revising Regulation
4.5 with respect to disclosure to
participants. Regulation 4.5 requires
that the qualifying entity disclose in
writing to participants that it is
operating pursuant to the terms of
Regulation 4.5. When it adopted
Regulation 4.5, the Commission noted
that the qualifying entity may satisfy
this requirement by including the
information in any document that its
other federal or state regulator requires
to be furnished routinely to participants.
If no such document is furnished
routinely, the information may be
disclosed in any instrument establishing
the entity’s investment policies and
objectives that the other regulator
requires to be made available to the
entity’s participants.10 Therefore, the
Commission is amending Regulation 4.5
to contain clarification regarding the
provision of disclosure according to the
requirements of other regulators.
C. Technical Amendments
As proposed, the Commission is
removing and reserving Regulation 4.2,
which specifies technical requirements,
such as address, for material filed with
the Commission under Part 4 of its
regulations. Amendments to
Commission regulations adopted in
2002 11 no longer require that any filings
required under Part 4 be submitted to
the Commission and thus the continued
existence of Regulation 4.2 is no longer
necessary. Further, two provisions
within Part 4 inadvertently were not
amended in 2002 and continue to
include references to filing with the
Commission. Accordingly, the
Commission is adopting technical
amendments to Regulations 4.8 and
4.12(b) to conform these sections to the
current filing requirements in the other
regulations to which they refer.
II. Comments
The Commission received two
comment letters on the proposed
amendments, from NFA and the
Committee on Futures Regulation of the
New York City Bar Association (‘‘Bar
Association’’). NFA supported the
proposed amendments and stated that
electronic filing of Part 4 notices would
increase efficiency, reduce staff time
currently devoted to processing notices,
and eliminate data entry errors because
the person claiming the notice will enter
the information directly into the system.
10 50
FR 15879 (April 23, 1985).
note 2.
11 See
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Both NFA and the Bar Association
commented regarding Advisory 18–96,
which is discussed in detail in Section
III, below.
III. Advisory 18–96
NFA also petitioned the Commission
to amend Advisory 18–96, which was
issued by the Commission’s former
Division of Trading and Markets, now
the Division of Clearing and
Intermediary Oversight.12 Advisory 18–
96 makes available exemptions from
disclosure and reporting requirements
under Regulations 4.21 and 4.22, and
specified recordkeeping requirements
under Regulation 4.23, to registered
CPOs of commodity pools organized
and operated outside the United States
and offered solely to non-United States
persons.13 In considering NFA’s
petition, the Commission reexamined
Advisory 18–96 and concluded that
additional exemptions from CPO
registration adopted in 2003 have
essentially superseded the provisions of
Advisory 18–96. Specifically,
Regulation 4.13(a)(4) permits a CPO to
claim exemption from CPO registration
where the pool is offered pursuant to an
exemption from registration under the
Securities Act of 1933 and its
participants are limited to natural
persons who are qualified eligible
persons (‘‘QEPs’’) under Regulation
4.7(a)(2), and non-natural persons that
are either QEPs under Regulation 4.7 or
accredited investors under 17 CFR
230.501(a)(1)–(3), (a)(7) and (a)(8). Since
non-United States persons are included
in the definition of QEP in Regulation
4.7(a)(2), CPOs meeting the criteria of
Advisory 18–96 may instead claim the
exemption available under Regulation
4.13(a)(4), which offers more extensive
relief than that available under Advisory
18–96.
Based on the overlap between the
terms of Advisory 18–96 and Regulation
4.13(a)(4), the Commission suggested in
the proposing release that it may be
appropriate to supersede Advisory 18–
96 prospectively, and requested
comments on this approach. The
Commission asked in particular for
comment on whether there are any
conflicts between the criteria and relief
in Advisory 18–96 and Regulation
4.13(a)(4), and whether the
unavailability of Advisory 18–96 on a
prospective basis would result in any
adverse consequences for CPOs. The
12 In 1997, the Commission also authorized NFA
to process notices of exemption pursuant to
Advisory 18–96. See note 1. Since 1997, NFA has
received approximately 500 notices of exemption
pursuant to Advisory 18–96.
13 ‘‘Non-United States person’’ is defined in
Regulation 4.7(a)(1)(iv).
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Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations
Commission proposed that CPOs that
have previously claimed relief under
Advisory 18–96 would be permitted to
continue to rely on the terms of
Advisory 18–96, or could choose to
claim exemption pursuant to Regulation
4.13(a)(4).
The Bar Association’s sole comment
related to Advisory 18–96. The letter
noted that, while most the provisions of
Advisory 18–96 have been superseded,
there is still a benefit to retaining
Advisory 18–96. Specifically, unlike
Regulation 4.13(a)(4), the Advisory does
not contain a requirement that a CPO
inform participants in writing regarding
the CPO’s unregistered status and
exemption from certain requirements.
The Bar Association asserted that
practitioners who advise offshore hedge
funds believe that it is unnecessary and
potentially confusing to the non-U.S.
domiciled investors to explain why the
sponsor is not registered with a U.S.
futures regulator, and recommended
that Advisory 18–96 be retained as an
option for CPOs.
NFA agreed in its comment letter that
section (a) of Advisory 18–96 could be
retired without consequence due to the
existence of Regulation 4.13(a)(4), but
suggested that the Commission consider
the consequences of superseding section
(b) of the Advisory. Section (b) of
Advisory 18–96 provides relief from the
requirement that a CPO maintain a
pool’s books and records at the CPO’s
main business office inside the U.S.
where the main business office of the
pool is located outside the U.S., as long
as the CPO maintains the pool’s original
books and records at the pool’s main
office located outside the U.S., keeps
duplicate books and records of the
commodity pool at a designated office
in the U.S., and makes the original
records available within 72 hours upon
the request of the Commission, the
United States Department of Justice or
NFA. NFA noted that pools that qualify
for relief under Section (b) of Advisory
18–96 do not necessarily qualify for
relief under Regulation 4.13(a)(4);
therefore, superseding the Advisory
would preclude new offshore pools
from taking advantage of this relief.
Based on the comments received, the
Commission has determined that it
should retain provisions of Advisory
18–96 that continue to be applicable to
the activities of U.S. CPOs operating
offshore pools. Accordingly, Advisory
18–96 will remain in effect, and relief
may continue to be claimed by CPOs by
filing a paper notice with NFA. The
Commission will further consider
whether it would be appropriate to
propose future amendments to Part 4 to
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codify the relief provided by Advisory
18–96.
IV. Amendments
Regulations 4.5, 4.7, 4.12(b), 4.13, and
4.14(a)(8) require that the notice
claiming the exclusion or exemption
available pursuant to each such
regulation must be filed in paper form.
The Commission is amending
Regulations 4.5, 4.7, 4.12(b), 4.13, and
4.14(a)(8) Regulation to provide that the
notice claiming exclusion or exemption
must be filed electronically with NFA
through compliance with NFA’s
electronic filing procedures.
V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act
(‘‘RFA’’), 5 U.S.C. 601 et seq., requires
that agencies, in proposing rules,
consider the impact of those rules on
small businesses. The Commission
previously has established certain
definitions of ‘‘small entities’’ to be used
by the Commission in evaluating the
impact of its rules on such entities in
accordance with the RFA.14 The
proposed rule amendments will not
place any burdens, whether new or
additional, on CPOs and CTAs who
would be affected hereunder, as the
proposed amendments simply alter the
mechanism for filing notices of
exemption and do not affect the
substance of those filings or the nature
of the qualifying criteria. The
Commission’s proposal solicited public
comment on this analysis.15 No
comments were received. Accordingly,
the Chairman, on behalf of the
Commission, hereby certifies, pursuant
to 5 U.S.C. 605(b), that the action it is
taking herein will not have a significant
economic impact on a substantial
number of small entities.
B. Paperwork Reduction Act
This rulemaking alters the method of
collection of information required under
Commission regulations, but does not
alter the substance of the filings.
Therefore, the Commission certified in
its proposal that the proposed rule
amendments, if promulgated in final
form, would not impact the total annual
reporting or recordkeeping burden
associated with the applicable
collection of information. As required
by the Paperwork Reduction Act of 1995
(44 U.S.C. 3507(d)), the Commission
submitted a copy of this section to the
Office of Management and Budget
(‘‘OMB’’) for its review. No comments
were received in response to the
14 47
15 71
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FR 18618 (April 30, 1982).
FR 60454 at 60456 (October 1, 2006).
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1661
Commission’s invitation in the notice of
proposed rulemaking 16 to comment on
any change in the potential paperwork
burden associated with these rule
amendments.
C. Cost-Benefit Analysis
Section 15(a) of the Act, as amended
by Section 119 of the CFMA, requires
the Commission to consider the costs
and benefits of its action before issuing
a new regulation under the Act. By its
terms, Section 15(a) does not require the
Commission to quantify the costs and
benefits of a new regulation or to
determine whether the benefits of the
regulation outweigh its costs. Rather,
Section 15(a) simply requires the
Commission to ‘‘consider the costs and
benefits’’ of its action.
Section 15(a) of the Act further
specifies that costs and benefits shall be
evaluated in light of five broad areas of
market and public concern: Protection
of market participants and the public;
efficiency, competitiveness, and
financial integrity of futures markets;
price discovery; sound risk management
practices; and other public interest
considerations. Accordingly, the
Commission could in its discretion give
greater weight to any one of the five
enumerated areas and could in its
discretion determine that,
notwithstanding its costs, a particular
regulation was necessary or appropriate
to protect the public interest or to
effectuate any of the provisions or to
accomplish any of the purposes of the
Act.
The Commission’s proposal contained
an analysis of its consideration of these
costs and benefits and solicited public
comment thereon.17 No comments were
received with respect to the analysis of
the Commission’s consideration.
Therefore, pursuant to such
consideration, the Commission has
decided to adopt these amendments as
discussed above.
List of Subjects in 17 CFR Part 4
Advertising, Brokers, Commodity
futures, Commodity pool operators,
Commodity trading advisors, Consumer
Protection, Reporting and recordkeeping
requirements.
Accordingly, 17 CFR Chapter I is
amended as follows:
I
PART 4—COMMODITY POOL
OPERATORS AND COMMODITY
TRADING ADVISORS
1. The authority citation for part 4
continues to read as follows:
I
16 Id.
17 71
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Authority: 7 U.S.C. 1a, 2, 4, 6(c), 6b, 6c, 6l,
6m, 6n, 6o, 12a, and 23.
2. Remove and reserve § 4.2.
3. Revise paragraphs (c) introductory
text, (c)(2)(i), (d)(1) and (2), and (f) of
§ 4.5 to read as follows:
I
I
§ 4.5 Exclusion for certain otherwise
regulated persons from the definition of the
term ‘‘commodity pool operator.’’
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(c) Any person who desires to claim
the exclusion provided by this section
shall file electronically a notice of
eligibility with the National Futures
Association through its electronic
exemption filing system; Provided,
however, That a plan fiduciary who is
not a named fiduciary as described in
paragraph (a)(4) of this section may
claim the exclusion through the notice
filed by the named fiduciary.
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(2) * * *
(i) Will disclose in writing to each
participant, whether existing or
prospective, that the qualifying entity is
operated by a person who has claimed
an exclusion from the definition of the
term ‘‘commodity pool operator’’ under
the Act and, therefore, who is not
subject to registration or regulation as a
pool operator under the Act; Provided,
that such disclosure is made in
accordance with the requirements of
any other federal or state regulatory
authority to which the qualifying entity
is subject. The qualifying entity may
make such disclosure by including the
information in any document that its
other federal or state regulator requires
to be furnished routinely to participants
or, if no such document is furnished
routinely, the information may be
disclosed in any instrument establishing
the entity’s investment policies and
objectives that the other regulator
requires to be made available to the
entity’s participants; and
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(d)(1) Each person who has claimed
an exclusion hereunder must, in the
event that any of the information
contained or representations made in
the notice of eligibility becomes
inaccurate or incomplete, amend the
notice electronically through National
Futures Association’s electronic
exemption filing system as may be
necessary to render the notice of
eligibility accurate and complete.
(2) This amendment required by
paragraph (d)(1) of this section shall be
filed within fifteen business days after
the occurrence of such event.
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(f) Any notice required to be filed
hereunder must be filed by a
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representative duly authorized to bind
the person specified in paragraph (a) of
this section.
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I 4. In § 4.7, revise paragraph (d)(1) to
read as follows:
§ 4.7 Exemption from certain part 4
requirements for commodity pool operators
with respect to offerings to qualified eligible
persons and for commodity trading
advisors with respect to advising qualified
eligible persons.
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*
(d) Notice of claim for exemption. (1)
A notice of a claim for exemption under
this section must:
(i) Provide the name, main business
address, main business telephone
number and the National Futures
Association commodity pool operator or
commodity trading advisor
identification number of the person
claiming the exemption;
(ii)(A) Where the claimant is a
commodity pool operator, provide the
name(s) of the pool(s) for which the
request is made; Provided, That a single
notice representing that the pool
operator anticipates operating singleinvestor pools may be filed to claim
exemption for single-investor pools and
such notice need not name each such
pool;
(B) Where the claimant is a
commodity trading advisor, contain a
representation that the trading advisor
anticipates providing commodity
interest trading advice to qualified
eligible persons;
(iii) Contain representations that:
(A) Neither the commodity pool
operator or commodity trading advisor
nor any of its principals is subject to any
statutory disqualification under section
8a(2) or 8a(3) of the Act unless such
disqualification arises from a matter
which was previously disclosed in
connection with a previous application
for registration if such registration was
granted or which was disclosed more
than thirty days prior to the filing of the
notice under this paragraph (d);
(B) The commodity pool operator or
commodity trading advisor will comply
with the applicable requirements of
§ 4.7; and
(C) Where the claimant is a
commodity pool operator, that the
exempt pool will be offered and
operated in compliance with the
applicable requirements of § 4.7;
(iv) Specify the relief claimed under
§ 4.7;
(v) Where the claimant is a
commodity pool operator, state the
closing date of the offering or that the
offering will be continuous;
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(vi) Be filed by a representative duly
authorized to bind the commodity pool
operator or commodity trading advisor;
(vii) Be filed electronically with the
National Futures Association through its
electronic exemption filing system; and
(viii)(A)(1) Where the claimant is a
commodity pool operator, except as
provided in paragraph (d)(1)(ii)(A) of
this section with respect to singleinvestor pools and in paragraph
(d)(1)(viii)(A)(2) of this section, be
received by the National Futures
Association:
(i) Before the date the pool first enters
into a commodity interest transaction, if
the relief claimed is limited to that
provided under paragraphs (b)(2), (3)
and (4) of this section; or
(ii) Prior to any offer or sale of any
participation in the exempt pool if the
claimed relief includes that provided
under paragraph (b)(1) of this section.
(2) Where participations in a pool
have been offered or sold in full
compliance with Part 4, the notice of a
claim for exemption may be filed with
the National Futures Association at any
time; Provided, That the claim for
exemption is otherwise consistent with
the duties of the commodity pool
operator and the rights of pool
participants and that the commodity
pool operator notifies the pool
participants of his intention, absent
objection by the holders of a majority of
the units of participation in the pool
who are unaffiliated with the
commodity pool operator within
twenty-one days after the date of the
notification, to file a notice of claim for
exemption under § 4.7 and such holders
have not objected within such period. A
commodity pool operator filing a notice
under this paragraph (d)(1)(viii)(A)(2)
shall either provide disclosure and
reporting in accordance with the
requirements of Part 4 to those
participants objecting to the filing of
such notice or allow such participants
to redeem their units of participation in
the pool within three months of the
filing of such notice.
(B) Where the claimant is a
commodity trading advisor, be received
by the Commission before the date the
trading advisor first enters into an
agreement to direct or guide the
commodity interest account of a
qualified eligible person pursuant to
§ 4.7.
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5. In § 4.8, revise paragraphs (a) and
(b) to read as follows:
I
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§ 4.8 Exemption from certain requirements
of rule 4.26 with respect to pools offered or
sold in certain offerings exempt from
registration under the Securities Act.
(a) Notwithstanding paragraph (d) of
§ 4.26 and subject to the conditions
specified herein, the registered
commodity pool operator of a pool
offered or sold solely to ‘‘accredited
investors’’ as defined in 17 CFR 230.501
in an offering exempt from the
registration requirements of the
Securities Act of 1933 pursuant to Rule
505 or 506 of Regulation D, 17 CFR
230.505 or 230.506, may solicit, accept
and receive funds, securities and other
property from prospective participants
in that pool upon filing with the
National Futures Association and
providing to such participants the
Disclosure Document for the pool.
(b) Notwithstanding paragraph (d) of
§ 4.26 and subject to the conditions
specified herein, the registered
commodity pool operator of a pool
offered or sold in an offering exempt
from the registration requirements of the
Securities Act of 1933 pursuant to Rule
505 or 506 of Regulation D, 17 CFR
230.505 or 230.506, that is operated in
compliance with, and has filed the
notice required by § 4.12(b) may solicit,
accept and receive funds, securities and
other property from prospective
participants in that pool upon filing
with the National Futures Association
and providing to such participants the
Disclosure Document for the pool.
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*
I 6. In § 4.12, revise paragraphs
(b)(1)(ii), (b)(3) and (b)(5)(i) to read as
follows:
§ 4.12
4.
Exemption from provisions of part
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(b) * * *
(1) * * *
(ii) Each existing participant and
prospective participant in the pool for
which it makes such request is informed
in writing of the restrictions set forth in
paragraph (b)(1)(i) (C) and (D) of this
section prior to the date the pool
commences trading commodity
interests. The pool operator may furnish
this information by way of the pool’s
Disclosure Document, Account
Statement, a separate notice or other
similar means, including written
communication delivered through
electronic transmission.
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(3) Any registered commodity pool
operator who desires to claim the relief
available under this § 4.12(b) must file
electronically a claim of exemption with
National Futures Association through its
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electronic exemption filing system.
Such claim must:
(i) Provide the name, main business
address and main business telephone
number of the registered commodity
pool operator, or applicant for such
registration, making the request;
(ii) Provide the name of the
commodity pool for which the request
is being made;
(iii) Contain representations that the
pool will be operated in compliance
with § 4.12(b)(1)(i) and the pool operator
will comply with the requirements of
§ 4.12(b)(1)(ii);
(iv) Specify the relief sought under
§ 4.12(b)(2); and
(v) Be filed by a representative duly
authorized to bind the pool operator.
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(5) * * *
(i) If a claim of exemption has been
made under § 4.12(b)(2)(i), the
commodity pool operator must make a
statement to that effect on the cover
page of each offering memorandum, or
amendment thereto, that it is required to
file with the National Futures
Association pursuant to § 4.26.
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I 7. In § 4.13, revise paragraphs (a)(5),
(b)(1) introductory text, (b)(1)(iii), (b)(2)
and (b)(4), and revise paragraph (e)(2),
to read as follows:
§ 4.13 Exemption from registration as a
commodity pool operator.
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*
(a) * * *
(5)(i) Eligibility for exemption under
this section is subject to the person
furnishing in written communication
physically delivered or delivered
through electronic transmission to each
prospective participant in the pool:
(A) A statement that the person is
exempt from registration with the
Commission as a commodity pool
operator and that therefore, unlike a
registered commodity pool operator, it
is not required to deliver a Disclosure
Document and a certified annual report
to participants in the pool; and
(B) A description of the criteria
pursuant to which it qualifies for such
exemption from registration.
(ii) The person must make these
disclosures by no later than the time it
delivers a subscription agreement for
the pool to a prospective participant in
the pool.
(b)(1) Any person who desires to
claim the relief from registration
provided by this section, must file
electronically a notice of exemption
from commodity pool operator
registration with the National Futures
Association through its electronic
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1663
exemption filing system. The notice
must:
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(iii) Be filed by a representative duly
authorized to bind the person.
(2) The person must file the notice by
no later than the time it delivers a
subscription agreement for the pool to a
prospective participant in the pool;
Provided, That where a person
registered with the Commission as a
commodity pool operator intends to
withdraw from registration in order to
claim exemption hereunder, the person
must 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 it must 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.
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*
(4) Each person who has filed a notice
of exemption from registration under
this section must, in the event that any
of the information contained or
representations made in the notice
becomes inaccurate or incomplete,
amend the notice through National
Futures Association’s electronic
exemption filing system as may be
necessary to render the notice accurate
and complete. This amendment must be
filed electronically within 15 business
days after the pool operator becomes
aware of the occurrence of such event.
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(e)(2) If a person operates one or more
commodity pools described in
paragraph (a)(3) or (a)(4) of this section,
and one or more commodity pools for
which it must be, and is, registered as
a commodity pool operator, the person
is exempt from the requirements
applicable to a registered commodity
pool operator with respect to the pool or
pools described in paragraph (a)(3) or
(a)(4) of this section; Provided, That the
person:
(i) Furnishes in written
communication physically delivered or
delivered through electronic
transmission to each prospective
participant in a pool described in
paragraph (a)(3) or (a)(4) of this section
that it operates:
(A) A statement that it will operate
the pool as if the person was exempt
from registration as a commodity pool
operator;
(B) A description of the criteria
pursuant to which it will so operate the
pool;
(ii) Complies with paragraph (c) of
this section; and
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Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations
(iii) Provides to each existing
participant in a pool that the person
elects to operate as described in
paragraph (a)(3) or (a)(4) of this section
a right to redeem the participant’s
interest in the pool, and informs each
such participant of that right no later
than the time the person commences to
operate the pool as described in
paragraph (a)(3) or (a)(4) of this section.
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I 8. In § 4.14, introductory text of
paragraph (a) and introductory text of
paragraph (a)(8) is republished and
paragraph (a)(8)(iii)(A) introductory text
and paragraphs (a)(8)(iii)(A)(3),
(a)(8)(iii)(B) and (a)(8)(iii)(D) are revised
to read as follows:
(D) Each person who has filed a notice
of exemption from registration under
this section must, in the event that any
of the information contained or
representations made in the notice
becomes inaccurate or incomplete,
amend the notice electronically through
National Futures Association’s
electronic exemption filing system as
may be necessary to render the notice
accurate and complete. This amendment
must be filed within 15 business days
after the trading advisor becomes aware
of the occurrence of such event.
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cprice-sewell on PROD1PC66 with RULES
§ 4.14 Exemption from registration as a
commodity trading advisor.
Issued in Washington, DC, on January 5,
2007 by the Commission.
Eileen A. Donovan,
Acting Secretary of the Commission.
[FR Doc. E7–174 Filed 1–12–07; 8:45 am]
BILLING CODE 6351–01–P
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*
(a) A person is not required to register
under the Act as a commodity trading
advisor if:
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*
*
(8) It is a registered as an investment
adviser under the Investment Advisers
Act of 1940 or with the applicable
securities regulatory agency of any
State, or it is exempt from such
registration, or it is excluded from the
definition of the term ‘‘investment
adviser’’ pursuant to the provisions of
section 202(a)(2) and 202(a)(11) of the
Investment Advisers Act of 1940,
Provided, That:
*
*
*
*
*
(iii)(A) A person who desires to claim
the relief from registration provided by
this § 4.14(a)(8) must file electronically
a notice of exemption from commodity
trading advisor registration with the
National Futures Association through its
electronic exemption filing system. The
notice must:
*
*
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*
*
(3) Be filed by a representative duly
authorized to bind the person.
(B) The person must file the notice by
no later than the time it delivers an
advisory agreement for the trading
program pursuant to which it will offer
commodity interest advice to a client;
Provided, That where the advisor is
registered with the Commission as a
commodity trading advisor, it must
notify its clients in written
communication physically delivered or
delivered through electronic
transmission that it intends to withdraw
from registration and claim the
exemption and must provide each such
client with a right to terminate its
advisory agreement prior to the person
filing a notice of exemption from
registration.
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DEPARTMENT OF COMMERCE
United States Patent and Trademark
Office
37 CFR Part 1
[Docket No.: PTO–P–2005–0015]
RIN 0651–AB75
Changes to Implement Priority
Document Exchange Between
Intellectual Property Offices
United States Patent and
Trademark Office, Commerce.
ACTION: Final rule.
AGENCY:
SUMMARY: The United States Patent and
Trademark Office (Office) has
established a 21st Century Strategic Plan
to transform the Office into a more
quality-focused, highly productive,
responsive organization supporting a
market-driven intellectual property
system. One goal of the 21st Century
Strategic Plan is the electronic exchange
of information and documents between
intellectual property offices. Consistent
with this goal, the Office is revising the
rules of practice to provide for the
electronic transfer of certified copies of
applications for which priority is
claimed under the Paris Convention
(priority applications) from other
intellectual property offices with which
the Office has negotiated priority
document exchange agreements. The
Office is also revising the rules of
practice to permit applicants to request
that the Office permit other
participating intellectual property
offices to electronically retrieve certified
copies of United States patent
applications without payment of a fee.
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This electronic exchange of copies of
priority documents will benefit
applicants by reducing the cost of
ordering paper certified copies of
priority applications for filing in other
participating intellectual property
offices, and will benefit participating
intellectual property offices by reducing
the administrative costs associated with
handling paper copies of priority
documents and scanning them into their
electronic image record management
systems.
DATES: Effective Date: January 16, 2007.
FOR FURTHER INFORMATION CONTACT:
Diana Oleksa, ((571) 272–3291), Legal
Advisor for IT Policy, Office of Patent
Cooperation Treaty Legal
Administration, Office of the Deputy
Commissioner for Patent Examination
Policy, or Robert A. Clarke ((571) 272–
7735), Deputy Director, Office of Patent
Legal Administration, Office of the
Deputy Commissioner for Patent
Examination Policy, at
PatentEFW.comments@uspto.gov or
directly by phone, or by facsimile to
(571) 273–7735, marked to the attention
of Ms. Oleksa, or by mail addressed to:
Mail Stop Comments-Patents,
Commissioner for Patents, P.O. Box
1450, Alexandria, VA 22313–1450.
SUPPLEMENTARY INFORMATION: The Office
has established a 21st Century Strategic
Plan to transform the Office into a more
quality-focused, highly productive,
responsive organization supporting a
market-driven intellectual property
system. One goal of the 21st Century
Strategic Plan is the electronic exchange
of information and documents between
intellectual property offices. The Office
plans to leverage its image file wrapper
(IFW) technology by negotiating
agreements with other patent offices to
permit the Office to obtain and provide
electronic copies of priority documents.
See 35 U.S.C. 2(b)(6) (authorizes the
Office, subject to certain conditions, to
use the services, records, facilities, or
personnel of any instrumentality or
foreign patent and trademark office or
international organization to perform
functions on its behalf) and 11
(authorizes the Office to exchange
copies of specifications and drawings of
United States patents and published
applications for patents for those of
other NAFTA or WTO member
countries). Agreements to obtain and
provide such copies have been
established with the European Patent
Office (EPO) and its member states, and
are being considered with the Japan
Patent Office (JPO), both of which
offices will have the technical ability to
provide and retrieve certified electronic
copies of priority documents via
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]]>Agencies
[Federal Register Volume 72, Number 9 (Tuesday, January 16, 2007)]
[Rules and Regulations]
[Pages 1658-1664]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-174]
=======================================================================
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 4
RIN 3038-AC33
Electronic Filing of Notices of Exemption and Exclusion Under
Part 4 of the Commission's Regulations
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Commodity Futures Trading Commission (``Commission'' or
``CFTC'') is amending Commission regulations to require that notices of
exemption or exclusion under Part 4 of the Commission's regulations
submitted to National Futures Association (``NFA'') be filed
electronically. Under the regulations the Commission is amending, the
submission of a notice through NFA's electronic exemption filing system
by a person duly authorized to bind the submitter will be permitted in
lieu of the manual signature currently required by each of these
regulations.
In addition, the Commission also is adopting technical amendments
that remove the procedure for making filings with the Commission
required by Part 4, and revising other sections of Part 4 to refer to
filings made with NFA rather than the Commission.
DATES: Effective Date: February 15, 2007.
FOR FURTHER INFORMATION CONTACT: Eileen R. Chotiner, Futures Trading
Specialist, at (202) 418-5467, or Kevin P. Walek, Assistant Director,
at (202) 418-5463, Division of Clearing and Intermediary Oversight,
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st
Street, NW., Washington, DC 20581. Electronic mail: echotiner@cftc.gov
or kwalek@cftc.gov.
SUPPLEMENTARY INFORMATION:
I. Background
A. Exemptions and Exclusions Under Part 4 of the Commission's
Regulations
On October 13, 2006, the Commission published for public comment
proposed amendments to Part 4 of its regulations.\1\
[[Page 1659]]
Part 4 of the Commission's regulations applies to the operation of
commodity pool operators (``CPOs'') and commodity trading advisors
(``CTAs''). Generally, a person who operates a commodity pool must
register with the Commission as a CPO,\2\ and a person who manages
clients' trading must register with the Commission as a CTA.\3\ Under
Commission Regulation 4.5, certain ``otherwise regulated persons'' are
excluded from the CPO definition. These persons include registered
investment companies, banks and trust companies, insurance companies,
and fiduciaries of ERISA pension plans. A person who qualifies for the
exclusion must file a notice of eligibility with NFA.\4\
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\1\ Commission regulations cited to herein are found at 17 CFR
Ch. I (2006).
\2\ Regulation 4.10(d)(1) defines a pool as ``any investment
trust, syndicate or similar form of enterprise operated for the
purpose of trading commodity interests.''
\3\ The Commodity Exchange Act (``Act'') defines a CTA as any
person who ``for compensation or profit, engages in the business of
advising others * * * as to the value of or the advisability of
trading in'' commodity interests. 7 U.S.C. 1a(6) (2000).
\4\ NFA is a registered futures association under the Act. 7
U.S.C. 21 (2000). As discussed below, the Commission has delegated
to NFA the responsibility for administrating the Commission's
registration program.
---------------------------------------------------------------------------
Commission regulations also make certain exemptions from CPO and
CTA registration available to persons who meet specified criteria.
Regulation 4.13 permits exemption from registration for CPOs that limit
their activities to small or family pools; or whose participants are
highly sophisticated; or whose pools limit participants to SEC
``accredited investors'' \5\ as that term is defined in the regulations
promulgated by the Securities and Exchange Commission (``SEC'') and
limit trading of commodity interests to a minimum amount specified in
the regulation. A notice claiming exemption from registration as a CPO
must be filed with NFA.
---------------------------------------------------------------------------
\5\ 17 CFR 230.501(a) (2006).
---------------------------------------------------------------------------
A CTA is exempt from registration if it meets criteria specified in
Regulation 4.14, including: it furnishes trading advice solely to
commodity pools for which it is the registered CPO or for which it is
exempt from CPO registration; it provides advice solely incidental to
the conduct of one of certain businesses or professions listed in the
Act or the Commission's regulations; it is registered with the
Commission in another capacity and its advice is solely in connection
with acting in that other capacity; it does not manage client accounts
or provide commodity trading advice based on, or tailored to, the
financial positions of particular clients; or it is an SEC-registered
investment adviser whose futures advice is incidental to providing
securities trading advice to the ``otherwise regulated'' trading
vehicles specified in Regulation 4.5, or to CPOs of pools operated
pursuant to the exemptions in Regulations 4.13(a)(3) and (4). A notice
must be filed to claim the exemption available to SEC-registered
investment advisers who meet the criteria set forth in Regulation
4.14(a)(8); the other exemptions from CTA registration do not require
the filing of an exemption notice to be effective.\6\
---------------------------------------------------------------------------
\6\ A statutory exemption from CTA registration exists in
Section 4m(1) of the Act for a person who has not had more than 15
clients during a 12-month period and is not otherwise holding itself
out as a CTA. 7 U.S.C. 6m (2000). A person who qualifies for this
exemption is not required to file a notice claiming the exemption.
---------------------------------------------------------------------------
Registered CPOs are required to provide a disclosure document to
prospective participants that includes disclosure of risks and
information such as the business backgrounds of persons involved with
the pool, investment objectives, fees, conflicts, material litigation,
and past performance. The CPO must provide unaudited periodic reports
and certified annual reports on the pool's financial operations to the
pool's participants. Disclosure documents and annual reports also must
be filed with NFA. Further, the CPO is required to make and keep
specified books and records for a period of five years, and make them
available for inspection by the CFTC, NFA, and the United States
Department of Justice. Registered CTAs must provide to prospective
participants, and file with NFA, disclosure documents containing
information about their trading programs, and also must comply with
specified recordkeeping requirements.
The Commission has established a simplified regulatory framework
for registered CPOs and CTAs who operate or advise pools and accounts
whose participants meet the criteria specified in Regulation 4.7.
Relief from full compliance with the disclosure, reporting, and
recordkeeping requirements is available where, for example, pool
participants are CFTC or SEC registrants, ``inside employees'' of the
CPO or CTA, or persons who earn $200,000 annually and who have assets
worth at least $2 million. A CPO offering a pool whose futures trading
is incidental to its securities trading and is limited to 10 percent of
the pool's net assets may claim exemption from some disclosure,
reporting and recordkeeping requirements pursuant to Regulation
4.12(b). A person claiming exemption under Regulations 4.7 or 4.12(b)
must file a notice with NFA.
In a Notice and Order issued in 1997,\7\ the Commission authorized
NFA to process: (1) Notices of eligibility for exclusion from the
definition of CPO for certain otherwise regulated persons, pursuant to
Commission Regulation 4.5; (2) notices of claim for exemption from
certain Part 4 requirements with respect to commodity pools and CTAs
whose participants or clients are qualified eligible persons, pursuant
to Commission Regulation 4.7; (3) claims of exemption from certain Part
4 requirements for CPOs with respect to pools that principally trade
securities, pursuant to Commission Regulation 4.12(b); (4) statements
of exemption from registration as a CPO, pursuant to Commission
Regulation 4.13; and (5) notices of exemption from registration as a
CTA for certain persons registered with the SEC as an investment
adviser, pursuant to Regulation 4.14(a)(8). The Commission also made
NFA the custodian of those records.\8\
---------------------------------------------------------------------------
\7\ 62 FR 52088 (October 6, 1997).
\8\ At the time NFA was authorized to process these notices,
Commission regulations required that copies of the notices also be
filed with the Commission. In December 2002, the Commission revised
its regulations to require that such notices be filed solely with
NFA. 67 FR 77409 (December 18, 2002).
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B. Electronic Filing of Part 4 Notices
NFA petitioned the Commission to amend its regulations to require
that the notices required under Regulations 4.5, 4.7, 4.12(b), 4.13,
and 4.14(a)(8) be filed electronically with NFA, and that submission of
a notice by a representative duly authorized to bind the person be
permitted in lieu of the manual signature currently specified under
each regulation that requires a notice filing. After considering the
comments received, the Commission has determined to amend Regulations
4.5, 4.7, 4.12(b), 4.13, and 4.14(a)(8) as set forth herein to
effectuate this purpose.
Firms that are registered with the Commission in any capacity and
non-registrants will both access NFA's electronic filing system through
the use of a designated user ID and password. Registered firms will
establish access for appropriate staff using the security manager
process in place for their existing Online Registration System
(``ORS'') accounts, the process that is currently used for registration
and other electronic filings with NFA.\9\ In order to
[[Page 1660]]
enable non-registrants, who are not required to have ORS accounts, to
file exemption notices, NFA has established a new process that contains
similar safeguards regarding the identity of the filers and provides
the non-registrant with the ability to establish one or more system
users. For both registrants and non-registrants, the person who submits
a notice must be a representative duly authorized to bind the
submitter. The person or firm that is making the filing, or on whose
behalf the filing is made, is responsible for ensuring that only
persons who are duly authorized to bind the filer are granted the
ability to submit notices.
---------------------------------------------------------------------------
\9\ The Commission previously has adopted amendments to its
regulations to enable NFA to utilize an online system for
registration functions (67 FR 38,869 (June 6, 2002)). The Commission
also adopted amendments to its regulations to require electronic
filing of financial statements of commodity pools (71 FR 8939
(February 22, 2006)) and introducing brokers (71 FR 67462 (November
22, 2006)).
---------------------------------------------------------------------------
The electronic filing system will allow filers to select the
applicable exemption type and complete a form that will provide the
information required for the exemption filing. Each form contains a
statement by the representative submitting the form that the
information contained therein is accurate and complete, to the best of
his or her knowledge, and that the submitter is duly authorized to bind
the person making the claim. Submission of the electronic form will
record the data regarding the filing in NFA's database system. The
system also will allow the filer to create a printer-friendly version
of exemption notices for the filer's records.
The amendments will no longer require persons filing the notices
with NFA to do so in paper form. Therefore, the Commission has
concluded that electronic transmission of a written notification to
participants, such as by electronic mail or facsimile, is consistent
with the requirement to provide the information in writing and is
amending each of the regulations with a participant notification
requirement, with the exception of Regulation 4.5, to make explicit
that notice may be delivered through electronic transmission. In
adopting such amendment, the Commission has reasoned that the provision
of written notice necessarily requires that the exemption filer
establish with the participant a method to deliver the written
communication. Should a participant have provided an email address or
facsimile number to the exemption filer for the purpose of receiving
communications from that person, the participant can reasonably be
expected to receive such written communications from the party,
including the written notification required under Commission
regulations, through such method of electronic transmission.
As discussed in the proposal, the Commission is not revising
Regulation 4.5 with respect to disclosure to participants. Regulation
4.5 requires that the qualifying entity disclose in writing to
participants that it is operating pursuant to the terms of Regulation
4.5. When it adopted Regulation 4.5, the Commission noted that the
qualifying entity may satisfy this requirement by including the
information in any document that its other federal or state regulator
requires to be furnished routinely to participants. If no such document
is furnished routinely, the information may be disclosed in any
instrument establishing the entity's investment policies and objectives
that the other regulator requires to be made available to the entity's
participants.\10\ Therefore, the Commission is amending Regulation 4.5
to contain clarification regarding the provision of disclosure
according to the requirements of other regulators.
---------------------------------------------------------------------------
\10\ 50 FR 15879 (April 23, 1985).
---------------------------------------------------------------------------
C. Technical Amendments
As proposed, the Commission is removing and reserving Regulation
4.2, which specifies technical requirements, such as address, for
material filed with the Commission under Part 4 of its regulations.
Amendments to Commission regulations adopted in 2002 \11\ no longer
require that any filings required under Part 4 be submitted to the
Commission and thus the continued existence of Regulation 4.2 is no
longer necessary. Further, two provisions within Part 4 inadvertently
were not amended in 2002 and continue to include references to filing
with the Commission. Accordingly, the Commission is adopting technical
amendments to Regulations 4.8 and 4.12(b) to conform these sections to
the current filing requirements in the other regulations to which they
refer.
---------------------------------------------------------------------------
\11\ See note 2.
---------------------------------------------------------------------------
II. Comments
The Commission received two comment letters on the proposed
amendments, from NFA and the Committee on Futures Regulation of the New
York City Bar Association (``Bar Association''). NFA supported the
proposed amendments and stated that electronic filing of Part 4 notices
would increase efficiency, reduce staff time currently devoted to
processing notices, and eliminate data entry errors because the person
claiming the notice will enter the information directly into the
system. Both NFA and the Bar Association commented regarding Advisory
18-96, which is discussed in detail in Section III, below.
III. Advisory 18-96
NFA also petitioned the Commission to amend Advisory 18-96, which
was issued by the Commission's former Division of Trading and Markets,
now the Division of Clearing and Intermediary Oversight.\12\ Advisory
18-96 makes available exemptions from disclosure and reporting
requirements under Regulations 4.21 and 4.22, and specified
recordkeeping requirements under Regulation 4.23, to registered CPOs of
commodity pools organized and operated outside the United States and
offered solely to non-United States persons.\13\ In considering NFA's
petition, the Commission reexamined Advisory 18-96 and concluded that
additional exemptions from CPO registration adopted in 2003 have
essentially superseded the provisions of Advisory 18-96. Specifically,
Regulation 4.13(a)(4) permits a CPO to claim exemption from CPO
registration where the pool is offered pursuant to an exemption from
registration under the Securities Act of 1933 and its participants are
limited to natural persons who are qualified eligible persons
(``QEPs'') under Regulation 4.7(a)(2), and non-natural persons that are
either QEPs under Regulation 4.7 or accredited investors under 17 CFR
230.501(a)(1)-(3), (a)(7) and (a)(8). Since non-United States persons
are included in the definition of QEP in Regulation 4.7(a)(2), CPOs
meeting the criteria of Advisory 18-96 may instead claim the exemption
available under Regulation 4.13(a)(4), which offers more extensive
relief than that available under Advisory 18-96.
---------------------------------------------------------------------------
\12\ In 1997, the Commission also authorized NFA to process
notices of exemption pursuant to Advisory 18-96. See note 1. Since
1997, NFA has received approximately 500 notices of exemption
pursuant to Advisory 18-96.
\13\ ``Non-United States person'' is defined in Regulation
4.7(a)(1)(iv).
---------------------------------------------------------------------------
Based on the overlap between the terms of Advisory 18-96 and
Regulation 4.13(a)(4), the Commission suggested in the proposing
release that it may be appropriate to supersede Advisory 18-96
prospectively, and requested comments on this approach. The Commission
asked in particular for comment on whether there are any conflicts
between the criteria and relief in Advisory 18-96 and Regulation
4.13(a)(4), and whether the unavailability of Advisory 18-96 on a
prospective basis would result in any adverse consequences for CPOs.
The
[[Page 1661]]
Commission proposed that CPOs that have previously claimed relief under
Advisory 18-96 would be permitted to continue to rely on the terms of
Advisory 18-96, or could choose to claim exemption pursuant to
Regulation 4.13(a)(4).
The Bar Association's sole comment related to Advisory 18-96. The
letter noted that, while most the provisions of Advisory 18-96 have
been superseded, there is still a benefit to retaining Advisory 18-96.
Specifically, unlike Regulation 4.13(a)(4), the Advisory does not
contain a requirement that a CPO inform participants in writing
regarding the CPO's unregistered status and exemption from certain
requirements. The Bar Association asserted that practitioners who
advise offshore hedge funds believe that it is unnecessary and
potentially confusing to the non-U.S. domiciled investors to explain
why the sponsor is not registered with a U.S. futures regulator, and
recommended that Advisory 18-96 be retained as an option for CPOs.
NFA agreed in its comment letter that section (a) of Advisory 18-96
could be retired without consequence due to the existence of Regulation
4.13(a)(4), but suggested that the Commission consider the consequences
of superseding section (b) of the Advisory. Section (b) of Advisory 18-
96 provides relief from the requirement that a CPO maintain a pool's
books and records at the CPO's main business office inside the U.S.
where the main business office of the pool is located outside the U.S.,
as long as the CPO maintains the pool's original books and records at
the pool's main office located outside the U.S., keeps duplicate books
and records of the commodity pool at a designated office in the U.S.,
and makes the original records available within 72 hours upon the
request of the Commission, the United States Department of Justice or
NFA. NFA noted that pools that qualify for relief under Section (b) of
Advisory 18-96 do not necessarily qualify for relief under Regulation
4.13(a)(4); therefore, superseding the Advisory would preclude new
offshore pools from taking advantage of this relief.
Based on the comments received, the Commission has determined that
it should retain provisions of Advisory 18-96 that continue to be
applicable to the activities of U.S. CPOs operating offshore pools.
Accordingly, Advisory 18-96 will remain in effect, and relief may
continue to be claimed by CPOs by filing a paper notice with NFA. The
Commission will further consider whether it would be appropriate to
propose future amendments to Part 4 to codify the relief provided by
Advisory 18-96.
IV. Amendments
Regulations 4.5, 4.7, 4.12(b), 4.13, and 4.14(a)(8) require that
the notice claiming the exclusion or exemption available pursuant to
each such regulation must be filed in paper form. The Commission is
amending Regulations 4.5, 4.7, 4.12(b), 4.13, and 4.14(a)(8) Regulation
to provide that the notice claiming exclusion or exemption must be
filed electronically with NFA through compliance with NFA's electronic
filing procedures.
V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et seq.,
requires that agencies, in proposing rules, consider the impact of
those rules on small businesses. The Commission previously has
established certain definitions of ``small entities'' to be used by the
Commission in evaluating the impact of its rules on such entities in
accordance with the RFA.\14\ The proposed rule amendments will not
place any burdens, whether new or additional, on CPOs and CTAs who
would be affected hereunder, as the proposed amendments simply alter
the mechanism for filing notices of exemption and do not affect the
substance of those filings or the nature of the qualifying criteria.
The Commission's proposal solicited public comment on this
analysis.\15\ No comments were received. Accordingly, the Chairman, on
behalf of the Commission, hereby certifies, pursuant to 5 U.S.C.
605(b), that the action it is taking herein will not have a significant
economic impact on a substantial number of small entities.
---------------------------------------------------------------------------
\14\ 47 FR 18618 (April 30, 1982).
\15\ 71 FR 60454 at 60456 (October 1, 2006).
---------------------------------------------------------------------------
B. Paperwork Reduction Act
This rulemaking alters the method of collection of information
required under Commission regulations, but does not alter the substance
of the filings. Therefore, the Commission certified in its proposal
that the proposed rule amendments, if promulgated in final form, would
not impact the total annual reporting or recordkeeping burden
associated with the applicable collection of information. As required
by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the
Commission submitted a copy of this section to the Office of Management
and Budget (``OMB'') for its review. No comments were received in
response to the Commission's invitation in the notice of proposed
rulemaking \16\ to comment on any change in the potential paperwork
burden associated with these rule amendments.
---------------------------------------------------------------------------
\16\ Id.
---------------------------------------------------------------------------
C. Cost-Benefit Analysis
Section 15(a) of the Act, as amended by Section 119 of the CFMA,
requires the Commission to consider the costs and benefits of its
action before issuing a new regulation under the Act. By its terms,
Section 15(a) does not require the Commission to quantify the costs and
benefits of a new regulation or to determine whether the benefits of
the regulation outweigh its costs. Rather, Section 15(a) simply
requires the Commission to ``consider the costs and benefits'' of its
action.
Section 15(a) of the Act further specifies that costs and benefits
shall be evaluated in light of five broad areas of market and public
concern: Protection of market participants and the public; efficiency,
competitiveness, and financial integrity of futures markets; price
discovery; sound risk management practices; and other public interest
considerations. Accordingly, the Commission could in its discretion
give greater weight to any one of the five enumerated areas and could
in its discretion determine that, notwithstanding its costs, a
particular regulation was necessary or appropriate to protect the
public interest or to effectuate any of the provisions or to accomplish
any of the purposes of the Act.
The Commission's proposal contained an analysis of its
consideration of these costs and benefits and solicited public comment
thereon.\17\ No comments were received with respect to the analysis of
the Commission's consideration. Therefore, pursuant to such
consideration, the Commission has decided to adopt these amendments as
discussed above.
---------------------------------------------------------------------------
\17\ 71 FR at 54791-2.
---------------------------------------------------------------------------
List of Subjects in 17 CFR Part 4
Advertising, Brokers, Commodity futures, Commodity pool operators,
Commodity trading advisors, Consumer Protection, Reporting and
recordkeeping requirements.
0
Accordingly, 17 CFR Chapter I is amended as follows:
PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS
0
1. The authority citation for part 4 continues to read as follows:
[[Page 1662]]
Authority: 7 U.S.C. 1a, 2, 4, 6(c), 6b, 6c, 6l, 6m, 6n, 6o, 12a,
and 23.
0
2. Remove and reserve Sec. 4.2.
0
3. Revise paragraphs (c) introductory text, (c)(2)(i), (d)(1) and (2),
and (f) of Sec. 4.5 to read as follows:
Sec. 4.5 Exclusion for certain otherwise regulated persons from the
definition of the term ``commodity pool operator.''
* * * * *
(c) Any person who desires to claim the exclusion provided by this
section shall file electronically a notice of eligibility with the
National Futures Association through its electronic exemption filing
system; Provided, however, That a plan fiduciary who is not a named
fiduciary as described in paragraph (a)(4) of this section may claim
the exclusion through the notice filed by the named fiduciary.
* * * * *
(2) * * *
(i) Will disclose in writing to each participant, whether existing
or prospective, that the qualifying entity is operated by a person who
has claimed an exclusion from the definition of the term ``commodity
pool operator'' under the Act and, therefore, who is not subject to
registration or regulation as a pool operator under the Act; Provided,
that such disclosure is made in accordance with the requirements of any
other federal or state regulatory authority to which the qualifying
entity is subject. The qualifying entity may make such disclosure by
including the information in any document that its other federal or
state regulator requires to be furnished routinely to participants or,
if no such document is furnished routinely, the information may be
disclosed in any instrument establishing the entity's investment
policies and objectives that the other regulator requires to be made
available to the entity's participants; and
* * * * *
(d)(1) Each person who has claimed an exclusion hereunder must, in
the event that any of the information contained or representations made
in the notice of eligibility becomes inaccurate or incomplete, amend
the notice electronically through National Futures Association's
electronic exemption filing system as may be necessary to render the
notice of eligibility accurate and complete.
(2) This amendment required by paragraph (d)(1) of this section
shall be filed within fifteen business days after the occurrence of
such event.
* * * * *
(f) Any notice required to be filed hereunder must be filed by a
representative duly authorized to bind the person specified in
paragraph (a) of this section.
* * * * *
0
4. In Sec. 4.7, revise paragraph (d)(1) to read as follows:
Sec. 4.7 Exemption from certain part 4 requirements for commodity
pool operators with respect to offerings to qualified eligible persons
and for commodity trading advisors with respect to advising qualified
eligible persons.
* * * * *
(d) Notice of claim for exemption. (1) A notice of a claim for
exemption under this section must:
(i) Provide the name, main business address, main business
telephone number and the National Futures Association commodity pool
operator or commodity trading advisor identification number of the
person claiming the exemption;
(ii)(A) Where the claimant is a commodity pool operator, provide
the name(s) of the pool(s) for which the request is made; Provided,
That a single notice representing that the pool operator anticipates
operating single-investor pools may be filed to claim exemption for
single-investor pools and such notice need not name each such pool;
(B) Where the claimant is a commodity trading advisor, contain a
representation that the trading advisor anticipates providing commodity
interest trading advice to qualified eligible persons;
(iii) Contain representations that:
(A) Neither the commodity pool operator or commodity trading
advisor nor any of its principals is subject to any statutory
disqualification under section 8a(2) or 8a(3) of the Act unless such
disqualification arises from a matter which was previously disclosed in
connection with a previous application for registration if such
registration was granted or which was disclosed more than thirty days
prior to the filing of the notice under this paragraph (d);
(B) The commodity pool operator or commodity trading advisor will
comply with the applicable requirements of Sec. 4.7; and
(C) Where the claimant is a commodity pool operator, that the
exempt pool will be offered and operated in compliance with the
applicable requirements of Sec. 4.7;
(iv) Specify the relief claimed under Sec. 4.7;
(v) Where the claimant is a commodity pool operator, state the
closing date of the offering or that the offering will be continuous;
(vi) Be filed by a representative duly authorized to bind the
commodity pool operator or commodity trading advisor;
(vii) Be filed electronically with the National Futures Association
through its electronic exemption filing system; and
(viii)(A)(1) Where the claimant is a commodity pool operator,
except as provided in paragraph (d)(1)(ii)(A) of this section with
respect to single-investor pools and in paragraph (d)(1)(viii)(A)(2) of
this section, be received by the National Futures Association:
(i) Before the date the pool first enters into a commodity interest
transaction, if the relief claimed is limited to that provided under
paragraphs (b)(2), (3) and (4) of this section; or
(ii) Prior to any offer or sale of any participation in the exempt
pool if the claimed relief includes that provided under paragraph
(b)(1) of this section.
(2) Where participations in a pool have been offered or sold in
full compliance with Part 4, the notice of a claim for exemption may be
filed with the National Futures Association at any time; Provided, That
the claim for exemption is otherwise consistent with the duties of the
commodity pool operator and the rights of pool participants and that
the commodity pool operator notifies the pool participants of his
intention, absent objection by the holders of a majority of the units
of participation in the pool who are unaffiliated with the commodity
pool operator within twenty-one days after the date of the
notification, to file a notice of claim for exemption under Sec. 4.7
and such holders have not objected within such period. A commodity pool
operator filing a notice under this paragraph (d)(1)(viii)(A)(2) shall
either provide disclosure and reporting in accordance with the
requirements of Part 4 to those participants objecting to the filing of
such notice or allow such participants to redeem their units of
participation in the pool within three months of the filing of such
notice.
(B) Where the claimant is a commodity trading advisor, be received
by the Commission before the date the trading advisor first enters into
an agreement to direct or guide the commodity interest account of a
qualified eligible person pursuant to Sec. 4.7.
* * * * *
0
5. In Sec. 4.8, revise paragraphs (a) and (b) to read as follows:
[[Page 1663]]
Sec. 4.8 Exemption from certain requirements of rule 4.26 with
respect to pools offered or sold in certain offerings exempt from
registration under the Securities Act.
(a) Notwithstanding paragraph (d) of Sec. 4.26 and subject to the
conditions specified herein, the registered commodity pool operator of
a pool offered or sold solely to ``accredited investors'' as defined in
17 CFR 230.501 in an offering exempt from the registration requirements
of the Securities Act of 1933 pursuant to Rule 505 or 506 of Regulation
D, 17 CFR 230.505 or 230.506, may solicit, accept and receive funds,
securities and other property from prospective participants in that
pool upon filing with the National Futures Association and providing to
such participants the Disclosure Document for the pool.
(b) Notwithstanding paragraph (d) of Sec. 4.26 and subject to the
conditions specified herein, the registered commodity pool operator of
a pool offered or sold in an offering exempt from the registration
requirements of the Securities Act of 1933 pursuant to Rule 505 or 506
of Regulation D, 17 CFR 230.505 or 230.506, that is operated in
compliance with, and has filed the notice required by Sec. 4.12(b) may
solicit, accept and receive funds, securities and other property from
prospective participants in that pool upon filing with the National
Futures Association and providing to such participants the Disclosure
Document for the pool.
* * * * *
0
6. In Sec. 4.12, revise paragraphs (b)(1)(ii), (b)(3) and (b)(5)(i) to
read as follows:
Sec. 4.12 Exemption from provisions of part 4.
* * * * *
(b) * * *
(1) * * *
(ii) Each existing participant and prospective participant in the
pool for which it makes such request is informed in writing of the
restrictions set forth in paragraph (b)(1)(i) (C) and (D) of this
section prior to the date the pool commences trading commodity
interests. The pool operator may furnish this information by way of the
pool's Disclosure Document, Account Statement, a separate notice or
other similar means, including written communication delivered through
electronic transmission.
* * * * *
(3) Any registered commodity pool operator who desires to claim the
relief available under this Sec. 4.12(b) must file electronically a
claim of exemption with National Futures Association through its
electronic exemption filing system. Such claim must:
(i) Provide the name, main business address and main business
telephone number of the registered commodity pool operator, or
applicant for such registration, making the request;
(ii) Provide the name of the commodity pool for which the request
is being made;
(iii) Contain representations that the pool will be operated in
compliance with Sec. 4.12(b)(1)(i) and the pool operator will comply
with the requirements of Sec. 4.12(b)(1)(ii);
(iv) Specify the relief sought under Sec. 4.12(b)(2); and
(v) Be filed by a representative duly authorized to bind the pool
operator.
* * * * *
(5) * * *
(i) If a claim of exemption has been made under Sec.
4.12(b)(2)(i), the commodity pool operator must make a statement to
that effect on the cover page of each offering memorandum, or amendment
thereto, that it is required to file with the National Futures
Association pursuant to Sec. 4.26.
* * * * *
0
7. In Sec. 4.13, revise paragraphs (a)(5), (b)(1) introductory text,
(b)(1)(iii), (b)(2) and (b)(4), and revise paragraph (e)(2), to read as
follows:
Sec. 4.13 Exemption from registration as a commodity pool operator.
* * * * *
(a) * * *
(5)(i) Eligibility for exemption under this section is subject to
the person furnishing in written communication physically delivered or
delivered through electronic transmission to each prospective
participant in the pool:
(A) A statement that the person is exempt from registration with
the Commission as a commodity pool operator and that therefore, unlike
a registered commodity pool operator, it is not required to deliver a
Disclosure Document and a certified annual report to participants in
the pool; and
(B) A description of the criteria pursuant to which it qualifies
for such exemption from registration.
(ii) The person must make these disclosures by no later than the
time it delivers a subscription agreement for the pool to a prospective
participant in the pool.
(b)(1) Any person who desires to claim the relief from registration
provided by this section, must file electronically a notice of
exemption from commodity pool operator registration with the National
Futures Association through its electronic exemption filing system. The
notice must:
* * * * *
(iii) Be filed by a representative duly authorized to bind the
person.
(2) The person must file the notice by no later than the time it
delivers a subscription agreement for the pool to a prospective
participant in the pool; Provided, That where a person registered with
the Commission as a commodity pool operator intends to withdraw from
registration in order to claim exemption hereunder, the person must
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 it must
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.
* * * * *
(4) Each person who has filed a notice of exemption from
registration under this section must, in the event that any of the
information contained or representations made in the notice becomes
inaccurate or incomplete, amend the notice through National Futures
Association's electronic exemption filing system as may be necessary to
render the notice accurate and complete. This amendment must be filed
electronically within 15 business days after the pool operator becomes
aware of the occurrence of such event.
* * * * *
(e)(2) If a person operates one or more commodity pools described
in paragraph (a)(3) or (a)(4) of this section, and one or more
commodity pools for which it must be, and is, registered as a commodity
pool operator, the person is exempt from the requirements applicable to
a registered commodity pool operator with respect to the pool or pools
described in paragraph (a)(3) or (a)(4) of this section; Provided, That
the person:
(i) Furnishes in written communication physically delivered or
delivered through electronic transmission to each prospective
participant in a pool described in paragraph (a)(3) or (a)(4) of this
section that it operates:
(A) A statement that it will operate the pool as if the person was
exempt from registration as a commodity pool operator;
(B) A description of the criteria pursuant to which it will so
operate the pool;
(ii) Complies with paragraph (c) of this section; and
[[Page 1664]]
(iii) Provides to each existing participant in a pool that the
person elects to operate as described in paragraph (a)(3) or (a)(4) of
this section a right to redeem the participant's interest in the pool,
and informs each such participant of that right no later than the time
the person commences to operate the pool as described in paragraph
(a)(3) or (a)(4) of this section.
* * * * *
0
8. In Sec. 4.14, introductory text of paragraph (a) and introductory
text of paragraph (a)(8) is republished and paragraph (a)(8)(iii)(A)
introductory text and paragraphs (a)(8)(iii)(A)(3), (a)(8)(iii)(B) and
(a)(8)(iii)(D) are revised to read as follows:
Sec. 4.14 Exemption from registration as a commodity trading advisor.
* * * * *
(a) A person is not required to register under the Act as a
commodity trading advisor if:
* * * * *
(8) It is a registered as an investment adviser under the
Investment Advisers Act of 1940 or with the applicable securities
regulatory agency of any State, or it is exempt from such registration,
or it is excluded from the definition of the term ``investment
adviser'' pursuant to the provisions of section 202(a)(2) and
202(a)(11) of the Investment Advisers Act of 1940, Provided, That:
* * * * *
(iii)(A) A person who desires to claim the relief from registration
provided by this Sec. 4.14(a)(8) must file electronically a notice of
exemption from commodity trading advisor registration with the National
Futures Association through its electronic exemption filing system. The
notice must:
* * * * *
(3) Be filed by a representative duly authorized to bind the
person.
(B) The person must file the notice by no later than the time it
delivers an advisory agreement for the trading program pursuant to
which it will offer commodity interest advice to a client; Provided,
That where the advisor is registered with the Commission as a commodity
trading advisor, it must notify its clients in written communication
physically delivered or delivered through electronic transmission that
it intends to withdraw from registration and claim the exemption and
must provide each such client with a right to terminate its advisory
agreement prior to the person filing a notice of exemption from
registration.
* * * * *
(D) Each person who has filed a notice of exemption from
registration under this section must, in the event that any of the
information contained or representations made in the notice becomes
inaccurate or incomplete, amend the notice electronically through
National Futures Association's electronic exemption filing system as
may be necessary to render the notice accurate and complete. This
amendment must be filed within 15 business days after the trading
advisor becomes aware of the occurrence of such event.
* * * * *
Issued in Washington, DC, on January 5, 2007 by the Commission.
Eileen A. Donovan,
Acting Secretary of the Commission.
[FR Doc. E7-174 Filed 1-12-07; 8:45 am]
BILLING CODE 6351-01-P
