CFTC Provides Family Office CTA Registration Relief and Limited Recordkeeping Relief Under Regulation 1.35(a)

January 6, 2015

The Commodity Futures Trading Commission (the “CFTC”) Division of Swap Dealer and Intermediary Oversight (“DSIO”) recently issued two no-action letters relevant to commodity trading advisors (“CTA”) as described below.

Family Office CTA Registration Relief

The CFTC recently issued a no-action letter providing relief from registration for a CTA that qualifies as a “family office” under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Under the Advisers Act, a family office is generally a company that does not hold itself out to the public as an investment adviser, is wholly owned by “Family Clients” and whose only clients are Family Clients.1

Although the CFTC previously provided no-action commodity pool operator (“CPO”) relief from registration for CPOs operating family offices, it remained silent regarding relief from registration for CTAs who provide services in the family office context. In this letter, the CFTC granted relief from CTA registration for any CTA who qualifies as a family office in connection with their advisory services provided to a Family Client. To claim relief, an eligible CTA serving Family Clients must submit an electronic filing with the CFTC. The claim must include the CTA’s name, its contact information, its capacity and the names of the pools for which the claim is being filed. The claim will be effective upon filing.

Limited Recordkeeping Relief from Regulation 1.35(a) for Registered CTAs

In another recent no-action letter, the DSIO extended temporary relief from its oral recording requirements for registered CTAs, which was scheduled to expire on December 31, 2014. In the same letter, the DSIO expanded the types of communications covered by the relief and added relief from certain “form and manner” requirements under Regulation 1.35(a). This temporary recordkeeping relief will expire on the earlier of December 31, 2015 or the effective date of the CFTC’s proposed Regulation 1.35(a) amendments to codify the temporary recordkeeping relief. No action is required to claim this no-action relief.

As discussed in a prior client alert, under Regulation 1.35(a), a registered CTA that is a member of a designated contract market (“DCM”) or swap execution facility (“SEF”) is required to keep full, complete, and systematic oral and written records, which include all pertinent data and memoranda, of all transactions relating to its business of dealing in commodity interests and related cash or forward transactions.2 A CTA with direct access trading privileges to a SEF is deemed to be a member of the SEF.

In a prior letter, the DSIO granted no-action relief for registered CTAs that are members of a DCM or SEF from the oral recordkeeping requirements under Regulation 1.35(a) with respect to swap transactions. In this current letter, the DSIO extended expiration of the prior relief and expanded the relief to cover all oral communications under Regulation 1.35(a), not just those oral communications leading to the execution of swap transactions. Additionally, this letter also provided relief from the “form and manner” requirements of Regulation 1.35(a) requirement to link, or otherwise identify, records of oral and written communications leading to the execution of a transaction in commodity interests and related cash or forward transactions with a particular transaction.


1 For the full definition of “family office” and “family client” under the Advisers Act, please see 17 CFR 275.202(a)(11)(G)-1 and 17 CFR 275.202(a)(11)(G)-1(d)(4).

2 This requirement does not apply to commodity pool operators, but it does apply to other categories of persons, such as futures commission merchants and introducing brokers.


If you have any questions regarding the matters covered in this memo, please contact any of the partners and counsel listed below or your primary attorney in Seward & Kissel’s Investment Management Group.


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