Entities Failed to Substantiate Eligibility Requirements in Response to DSIO Special Call
Washington, DC (STL.News) The Commodity Futures Trading Commission today announced it has issued an order deeming the commodity pool operator (CPO) exemptions of 17 entities to be ineffective following a special call by the Division of Swap Dealer and Intermediary Oversight (DSIO). The order was approved by the Commission on July 7, 2020 and is effective immediately. The special call was authorized by the Commission in March 2020.
“This Commission action, and the related use of its special call authority, sends a strong message that we take our registration and exemption regime seriously,” said DSIO Director Joshua B. Sterling. “This regime is fundamental to our oversight of market participants, and we are dedicated to ensuring its integrity and to reacting swiftly when firms fail to comply with the rules.”
Each of the entities, purportedly based abroad, had claimed an exemption from CPO registration in accordance with Commission Regulation 4.13(a)(2), which provides that a person is not required to register as a CPO if:
- none of the pools it operates has more than 15 participants at any time; and
- the total gross capital contributions it receives for units of participation in all of the pools it operates or that it intends to operate do not in the aggregate exceed $400,000.
The special call was initiated in accordance with Commission Regulation 4.13(c)(1)(iii), which requires persons claiming an exemption to submit to such special calls as the Commission may make to demonstrate eligibility for and compliance with the applicable criteria for exemption.
“Working with the National Futures Association (NFA), we identified credible reason to believe that certain entities may have claimed the exemption without meeting the eligibility criteria,” added DSIO Deputy Director Amanda Olear.
Each of the entities named in the order failed to comply with its obligation to respond to the special call, which led the Commission to deem their claimed exemptions ineffective.
Each named entity’s claimed exemption has been withdrawn from NFA’s records.