CFTC Proposes to Codify RIA CPO Registration Relief and Restore Related CTA Exemption
Background
On August 18, 2026, the Commodity Futures Trading Commission (the “CFTC”) issued a notice of proposed rulemaking (the “Proposed Rule”)1 that would (i) create a new exemption from commodity pool operator (“CPO”) registration for certain investment advisers registered with the Securities and Exchange Commission (the “SEC” and such advisers, “RIAs”) and operating commodity pools for sophisticated investors and (ii) restore a related exemption from commodity trading advisor (“CTA”) registration that existed before the rescission of former Rule 4.13(a)(4) in 2012 (the “Former Rule”).
The Proposed Rule is rooted in the framework established by CFTC Staff Letter 25-50 (“Staff Letter 25-50”),2 which the CFTC’s Market Participants Division issued in December 2025 to provide no-action relief from CPO and CTA registration for certain RIAs operating pools composed exclusively of qualified eligible persons (“QEPs”). Staff Letter 25-50 is expressly intended as interim relief while the CFTC considers whether to restore the exemptive framework that existed before the rescission of the Former Rule.3 However, the Proposed Rule should not be viewed merely as a codification of Staff Letter 25-50, as the Proposed Rule both modifies and expands upon the no-action relief, including by revisiting the treatment of Form PF reporting, investor eligibility standards and transition mechanics, restoring related CTA registration relief and providing additional guidance regarding Rule 506(c) offerings and delegated CPO structures.4
The centerpiece of the Proposed Rule is a new exemption from CPO registration for certain RIAs operating commodity pools for sophisticated investors (the “RIA-QEP Exemption”). To rely on the exemption, in addition to remaining registered with the SEC as an investment adviser, an RIA generally would be required to: (i) offer interests in the relevant pool pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”); (ii) refrain from publicly marketing the pool in the United States, except in connection with a Rule 506(c) offering; (iii) satisfy the investor eligibility requirements discussed below; and (iv) file Form PF with respect to the pool if otherwise required. The Proposed Rule would also restore related CTA registration relief through amendments to CFTC Rule 4.14(a)(8).
Three aspects of the Proposed Rule are likely to be of particular interest to RIAs managing private funds:
- Form PF reporting. Whereas Staff Letter 25-50 requires, as a condition of the relief, that an RIA files Form PF with respect to a covered pool, the Proposed Rule would require filing Form PF only when otherwise required under Form PF and applicable securities regulations. At the same time, the CFTC specifically requests comments on whether alternative reporting may be necessary if recently proposed Form PF amendments significantly reduce the private fund data available to the agency.
- Investor eligibility standards. Consistent with the Former Rule, the Proposed Rule would apply different eligibility standards to natural-person and non-natural-person investors. As drafted, the proposal could permit certain institutional investors that qualify only as accredited investors to participate in an exempt pool while excluding certain natural persons that qualify as QEPs solely through the portfolio-based tests in CFTC Rule 4.7. As discussed below, this departs from the more straightforward QEP-focused analysis many managers apply under Staff Letter 25-50 and could have significant implications with respect to funds that rely on Section 3(c)(1) of the Investment Company Act of 1940, as amended (“Section 3(c)(1) Funds”) for evaluating investor eligibility for purposes of the exemption.
- Transition issues. The Proposed Rule provides important guidance regarding transition mechanics, including how the CFTC expects to treat RIAs that already rely on Staff Letter 25-50 and RIAs that remain registered with the CFTC notwithstanding that such relief is available.
Key Differences from Staff Letter 25-50
Form PF Filing Requirement
Under Staff Letter 25-50, an RIA is required to file Form PF with respect to the pools covered by the relief. That condition helps justify the relief because the CFTC will continue to receive information regarding the covered pools. Since the issuance of Staff Letter 25-50, though, the SEC and CFTC have separately proposed amendments to Form PF that would significantly increase certain reporting thresholds and, as a result, reduce the number of RIAs required to file Form PF (the “Proposed Form PF Amendments”).
The Proposed Rule would modify this condition by requiring an RIA to file Form PF only to the extent the RIA is otherwise required to do so under Form PF and applicable securities regulations. As a result, RIAs that would not be required to file Form PF under the Proposed Form PF Amendments, or that otherwise do not have a Form PF filing obligation with respect to a particular pool, may remain eligible for the RIA-QEP Exemption under the Proposed Rule. Reflecting the significance of this issue, the Proposed Rule specifically requests comments on whether additional reporting mechanisms may be necessary following the potential codification of the Proposed Form PF Amendments.
Investor Eligibility Standards
The investor eligibility requirements are another significant area in which the Proposed Rule reflects a return to the Former Rule framework rather than a simple codification of Staff Letter 25-50. Under Staff Letter 25-50, RIAs are required to ensure that all pool participants are QEPs. Consistent with the Former Rule, however, the Proposed Rule would apply different eligibility standards to natural-person and non-natural-person investors, and those standards do not depend solely on QEP status.
For natural-person investors, the Proposed Rule would limit eligibility to the categories of QEPs identified in Rule 4.7(a)(6)(i), which consists of categories of investors that the CFTC historically viewed as particularly sophisticated or otherwise less in need of the protections associated with CPO registration. These categories include, among others, qualified purchasers, knowledgeable employees and non-US persons.
Importantly, the Proposed Rule does not simply permit every natural person that qualifies as a QEP. As drafted, a natural person who qualifies as a QEP solely through the portfolio-based tests in CFTC Rule 4.7 may be ineligible for purposes of the exemption if that individual does not fit within one of the specified Rule 4.7(a)(6)(i) categories. This change from Staff Letter 25-50 aligns the Proposed Rule with the way the Former Rule operated before its rescission in 20125 and will require RIAs, particularly those managing Section 3(c)(1) Funds, to conduct a more nuanced review of their investor base than may have been necessary under Staff Letter 25-50 when evaluating eligibility for the exemption. In particular, an RIA that manages a Section 3(c)(1) Fund and would otherwise obtain QEP representations from all of the fund’s investors for purposes of Staff Letter 25-50 may be unable to rely on the RIA-QEP Exemption under the Proposed Rule if certain natural-person investors qualify as QEPs solely through the portfolio-based tests in CFTC Rule 4.7.
For non-natural-person investors, the Proposed Rule expands the pool of eligible investors relative to Staff Letter 25-50. An entity investor could qualify either as a QEP or as an accredited investor under Rules 501(a)(1)-(3), (7) or (8) of Regulation D under the Securities Act, including, among others, registered investment companies and business development companies, corporations, partnerships, limited liability companies and business trusts meeting the applicable accredited-investor requirements and entities in which all equity owners are accredited investors.
Transition Issues and Redemption Rights
The Proposed Rule also raises important questions regarding transitioning from registration to exemption. Under CFTC Rule 4.13(e)(2)(iii), a registered CPO claiming an exemption under CFTC Rule 4.13 is required to provide pool participants with a right to redeem their interests before the CPO begins operating the pool pursuant to the exemption. That requirement also existed as part of the Former Rule framework before its rescission in 2012. Staff Letter 25-50, however, expressly provided that RIAs relying on the relief would not be required to comply with CFTC Rule 4.13(e)(2) solely with respect to the relevant pools.
RIAs Relying on Staff Letter 25-50
The Proposed Rule states that the CFTC does not intend to impose additional, conflicting requirements on RIAs currently relying on Staff Letter 25-50 for qualifying pools, many of which may have deregistered in reliance on that relief. As a result, the CFTC preliminarily intends that such RIAs generally would not be subject to CFTC Rule 4.13(e)(2) with respect to those pools. To carry out that intention, the CFTC requests comments on whether a separate, later effective date for the application of CFTC Rule 4.13(e)(2) to RIAs relying on the RIA-QEP Exemption would appropriately address the issue.
RIAs That Remain Registered
The analysis is different for RIAs that elect to remain registered with the CFTC despite Staff Letter 25-50 eligibility. Under the Proposed Rule, if those RIAs elect to rely on the RIA-QEP Exemption, then they would generally transition under the same framework that existed under the Former Rule, including the potential application of Rule 4.13(e)(2) and its redemption right requirements.
Additional Changes and Clarifications
CTA Registration Relief
Prior to the rescission of the Former Rule, the relevant CPO and CTA exemptions operated as an integrated framework. Advisers providing commodity interest trading advice solely to qualifying pools could generally rely on a CTA exemption corresponding to the relevant CPO exemption. Staff Letter 25-50 provides no-action relief from CTA registration corresponding to the relief from CPO registration and the Proposed Rule would amend Rule 4.14(a)(8) to restore the CTA registration exemption corresponding to the RIA-QEP Exemption.
Filing Mechanics
Staff Letter 25-50 creates a bespoke reliance process under which notices for relief are submitted directly to the CFTC. The Proposed Rule would instead integrate the RIA-QEP Exemption into the ordinary CFTC Rule 4.13 exemption process administered through the National Futures Association portal. In the Proposed Rule, the CFTC notes that implementing Staff Letter 25-50 is operationally cumbersome for the agency, the National Futures Association and market participants. The Proposed Rule intends to address those practical difficulties.
Conclusion
The Proposed Rule seeks to recreate a broader exemptive framework and aims to address investor eligibility standards, CPO and CTA registration relief, reporting obligations, National Futures Association administration and transition issues in a cohesive manner. RIAs should consider whether aspects of the Proposed Rule, including the Form PF condition, investor eligibility standards and transition mechanics, warrant comment. We will continue to monitor developments relating to the Proposed Rule and are available to assist clients in assessing its potential impact.
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Footnotes
2. CFTC Staff Letter No. 25-50 (Dec. 19, 2025), which was later extended by CFTC Staff Letter No. 26-06 (Feb. 26, 2026). For purposes of this client alert, references to Staff Letter No. 25-50 include the updated CFTC Staff Letter No. 26-06.
3. Id. at 7.
4. The Proposed Rule would also increase the aggregate gross capital contributions threshold for the small pool exemption from $400,000 to $800,000 and address certain issues relating to Rule 506(c) offerings and delegated CPO structures. While potentially important in particular circumstances, those aspects of the proposal are unlikely to have the same practical significance for most institutional private fund sponsors as the principal issues discussed herein.
5. The Proposed Rule, at 21-22 (explaining the CFTC’s rationale for distinguishing between natural-person and non-natural-person investors and noting that institutional investors typically possess greater financial resources, compliance infrastructure, investment experience and risk-management capabilities).