The US CFTC’s Division of Swap Dealer and Intermediary Oversight (DSIO) has issued a no-action letter for commodity pool operators (CPOs) that are non-registered investment companies that use wholly-owned trading subsidiaries to trade commodity interests.

In the letter, DSIO does not recommend that the Commission take an enforcement action against a CPO for failure to provide the following:
 

• A separate annual report for a parent pool’s trading subsidiary to the National Futures Association (NFA) pursuant to Commission regulation 4.7(b) or 4.22(c), as applicable; and

• A separate CPO-PQR report for a parent pool’s trading subsidiary to NFA pursuant to Commission regulation 4.27(c).

This relief is dependent on:

• The CPO of the parent pool being the CPO of the trading subsidiary; 

• The exposure to the trading subsidiary by the participants in its parent pool being shared pro rata;
• The CPO consolidating the reporting under Commission regulation 4.7(b) or 4.22(c), as applicable, and Commission regulation 4.27(c) for the trading subsidiary with those of its parent pool; and

• The CPO claiming the relief through notice


DSIO has previously issued similar relief to CPOs of registered investment companies that use controlled foreign corporations in CFTC Staff Letter No 13-51. This letter essentially expands the class of commodity pools for which a CPO may consolidate annual reports and CPO-PQR reports.