On September 3 2014 the US Commodity Futures Trading Commission's (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) issued a no-action letter for commodity pool operators (CPOs) of certain commodity pools that are non-registered investment companies ('parent pools') and use wholly owned trading subsidiaries to trade commodity interests. In cases where CPOs do not provide a separate annual report(1) or a separate Form CPO-PQR report for a parent pool's trading subsidiary to the National Futures Association,(2) the DSIO recommends that the CFTC not take enforcement action, as long as:

  • the CPO of the parent pool is also the CPO of the trading subsidiary;
  • the exposure to the trading subsidiary by the participants in its parent pool is shared pro rata;
  • the CPO consolidates the reports for the trading subsidiary with those of its parent pool; and
  • the CPO claims the relief through notice.

For further information on this topic please contact Donna M Parisi, Geoffrey B Goldman or Azam H Aziz at Shearman & Sterling LLP by telephone (+1 212 848 4000), fax (+1 212 848 7179) or email (dparisi@shearman.com, geoffrey.goldman@shearman.com or aaziz@shearman.com).The Shearman & Sterling website can be accessed at www.shearman.com.


(1) Pursuant to CFTC Regulation 4.7(b) or 4.22(c), as applicable.

(2) Pursuant to CFTC Regulation 4.27(c).