On September 17, 2010, the CFTC issued a notice seeking comments on proposed amendments to CFTC Rule 4.5, which provides an exclusion from the term commodity pool operator for eligible persons operating certain qualifying entities, including registered funds. The proposed amendments would restore restrictions substantially similar to those in effect prior to 2003. Prior to 2003, persons seeking to fit within the exclusion were required to file a notice of eligibility and represent that the qualifying entity (1) has not marketed, and will not market, participations to the public as in a commodity pool or otherwise as a vehicle for trading commodity futures or commodity options and (2) will use commodity futures or commodity options contracts solely for bona fide hedging purposes and that the aggregate initial margin and premiums for speculative futures positions will not exceed 5% of the liquidation value of the qualifying entity’s portfolio, after taking into account unrealized profits and losses on all such contracts. The amendments would also modify the limitation on speculative futures positions from former Rule 4.5 by referring directly to the qualifying entity claiming the exclusion. This could prohibit funds from trading futures and options on futures in wholly-owned subsidiaries, unless the subsidiary has also claimed an exemption under the Rule.

Comments on the proposed amendments are due by October 18, 2010.