CFTC issues no-action relief for private fund managers pending potential reinstatement of significant CPO registration exemption

The MPD issued the Letter in response to a request made by the Managed Funds Association (MFA), and it is intended to serve as an interim measure while the CFTC considers formal rulemaking to reinstate the exemption from CPO registration formerly set forth in CFTC Regulation 4.13(a)(4) (QEP Exemption).

Regulatory background

The QEP Exemption was adopted in 2003 to eliminate duplicative regulatory requirements for CPOs that were also SEC-registered private fund managers.² The QEP Exemption allowed CPOs to avoid CPO registration with respect to certain pools offered solely to sophisticated investors, including certain categories of qualified eligible persons (QEPs), as defined in CFTC Regulation 4.7. However, the CFTC rescinded the QEP Exemption in 2012, citing concerns that risks associated with private funds also applied to commodity pools and merited enhanced oversight and reporting.³ Following the rescission of the QEP Exemption, numerous CPOs were forced to either register with the CFTC or seek reliance on one or more alternative CPO registration exemptions (in some cases, imposing significant constraints on their pools’ commodity interest trading activities).

The no-action relief

Pursuant to the Letter, until such time as the CFTC promulgates rules, or publicly determines not to promulgate rules, to address the reinstatement of the QEP Exemption, the MPD will not recommend that the CFTC take enforcement action against any person that fails to register with the CFTC as a CPO, or withdraws from registration as a CPO, subject to the following conditions:

• The person is currently or would be required to register as a CPO with the CFTC, or relies on other registration relief in CFTC Regulation 4.13.
• The person is registered with the U.S. Securities and Exchange Commission (SEC) as an investment adviser.
• Interests in the relevant pool are exempt from registration under the U.S. Securities Act of 1933 and are sold without marketing to the public in the United States (unless interests in the pool are offered pursuant to SEC Rule 506(c)).
• The person reasonably believes at the time of investment, or at the time of relying on the relief provided in the Letter, that each pool participant is a QEP as defined in CFTC Regulation 4.7(a)(6).
• The person files a Form PF with the SEC with respect to the pool(s) for which it claims the relief provided in the Letter, which filing is received by the CFTC.
• The person complies with the requirements of CFTC Regulations 4.13(b) (except paragraph (b)(2)) and 4.13(c), except that the person files the notices documenting reliance on the relief provided in the Letter via e-mail to mpdnoaction@cftc.gov.

Furthermore, until such time as the CFTC promulgates rules, or publicly determines not to promulgate rules, to address the reinstatement of the QEP Exemption, solely with respect to the pools for which a person meets the conditions above and relies on the relief provided in the Letter to not register as a CPO or to withdraw from registration as a CPO, the MPD will not recommend that the CFTC take enforcement action against such person, if such person fails to register, or withdraws from registration, as a CTA in connection with the commodity trading advice it provides to such pools.

Disapplication of redemption rights

Notably, the MFA also requested that the MPD confirm that CPOs deregistering in reliance on the Letter would not need to provide pool participants with an opportunity to withdraw from the relevant pool prior to claiming the relief provided in the Letter, as might otherwise be required by CFTC Regulation 4.13(e). The MPD provided such confirmation, noting that imposing such a condition would be economically unfeasible for private funds, could disrupt negotiated liquidity terms, and would disadvantage managers that had previously registered with the CFTC.

Practical implications

The Letter is intended to reduce regulatory burdens for certain private fund managers serving sophisticated investors, pending potential reinstatement of the QEP Exemption. However, it should be noted that the MPD retains discretion to modify or withdraw the Letter’s relief as circumstances warrant, and that reliance on the Letter is subject to certain conditions that were not required by the QEP Exemption. In particular, the Letter’s relief is available only to an SEC-registered investment adviser that files Form PF with respect to the pools covered by the Letter, and a pool whose interests are sold exclusively to QEPs would not necessarily be a private fund or be required to be reported on Form PF. (Such a pool might, for example, rely on Section 3(c)(5), rather than Section 3(c)(1) or 3(c)(7), of the Investment Company Act of 1940, as amended.)

Additionally, because the relief is available only to SEC-registered investment advisers that file Form PF, the relief will not be available to certain smaller SEC-registered investment advisers (i.e., those that do not file Form PF) or to so-called “exempt reporting advisers.”

Private fund managers considering reliance on the Letter should carefully review the eligibility criteria outlined in the Letter. 

Footnotes

1. CFTC No-Action Letter No. 25-50 (Dec. 19, 2025).

2. See Additional Registration and Other Regulatory Relief for Commodity Pool Operators and Commodity Trading Advisors; Past Performance Issues, 68 FR 47221, 47223 (Aug. 8, 2003).

3. See Commodity Pool Operators and Commodity Trading Advisors: Compliance Obligations, 77 FR 11252 at 11253 (Feb. 24, 2012).