This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

54794 

Vol. 75, No. 174 

Thursday, September 9, 2010 

1 7 U.S.C. 1a(5) (2006). 

The Act and the Commission’s regulations may 

be accessed through the Commission’s Web site, at: 

http://www.cftc.gov. 

2 7 U.S.C. 6m(1) (2006). 

3The Commission’s regulations are found at 17 

CFR Ch. I (2010), and, as noted previously, can be 

accessed through the Commission’s Web site. Part 

4 of the regulations also governs the operations and 

activities of commodity trading advisors (CTAs), 

who are defined in Section 1a(6) of the Act and, like 

CPOs, are subject to registration under Section 

4m(1) of the Act. However, the operations and 

activities of CTAs are not the subject of the 

Proposal. 4Regulation 4.21. 

5Regulation 4.22. 

6Regulation 4.23. 

7Regulation 4.20. 

8Regulation 4.41. 

9See, e.g., Section 4o of the Act. 10See, e.g., Section 4b of the Act and Parts 15 and 

18 of the Regulations. 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 4 

RIN 3038–AC46 

Commodity Pool Operators: Relief 

From Compliance With Certain 

Disclosure, Reporting and 

Recordkeeping Requirements for 

Registered CPOs of Commodity Pools 

Listed for Trading on a National 

Securities Exchange; CPO Registration 

Exemption for Certain Independent 

Directors or Trustees of These 

Commodity Pools 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Proposed rules. 

SUMMARY: The Commodity Futures 

Trading Commission (Commission or 

CFTC) is proposing changes to its 

regulations as they affect certain 

commodity pool operators (CPOs) of 

commodity pools whose units of 

participation are listed and traded on a 

national securities exchange (Proposal). 

Specifically, the Proposal would codify 

the relief from certain disclosure, 

reporting and recordkeeping 

requirements that Commission staff 

previously has issued on a case-by-case 

basis to these CPOs. In addition, the 

Proposal would provide relief from the 

CPO registration requirement for certain 

independent directors or trustees of 

actively-managed commodity pools. 

DATES: Written comments must be 

received on or before October 25, 2010. 

ADDRESSES: Interested persons may 

submit comments by any of the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: [e-mail address TBD] 

Include ‘‘Proposed Regulatory Relief for 

CPOs of Exchange-Listed Commodity 

Pools’’ in the subject line of the message. 

• Fax: (202) 418–5521. 

• Mail: Send to David Stawick, 

Secretary, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, N.W., Washington, DC 

20581. 

• Courier: Same as Mail above. 

All comments received will be posted, 

without change, to http://www.cftc.gov. 

All comments must be in English or, if 

in another language, accompanied by an 

English translation. 

FOR FURTHER INFORMATION CONTACT: 

Christopher W. Cummings, Special 

Counsel, Division of Clearing and 

Intermediary Oversight, or Barbara S. 

Gold, Associate Director, Division of 

Clearing and Intermediary Oversight, 

Commodity Futures Trading 

Commission, 1155 21st Street, NW., 

Washington, DC 20581, telephone 

number: (202) 418–5450; facsimile 

number: (202) 418–5528; and electronic 

mail: ccummings@cftc.gov, or 

bgold@cftc.gov, respectively. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Regulation of CPOs 

Section 1a(5) of the Commodity 

Exchange Act (Act) defines the term 

‘‘commodity pool operator’’ to mean: 

[A]ny person engaged in a business that is 

of the nature of an investment trust, 

syndicate, or similar form of enterprise, and 

who, in connection therewith, solicits, 

accepts, or receives from others, funds, 

securities, or property, either directly or 

through capital contributions, the sale of 

stock or other forms of securities, or 

otherwise, for the purpose of trading in any 

commodity for future delivery on or subject 

to the rules of any contract market or 

derivatives transaction execution facility, 

*** 1

Section 4m(1) of the Act provides, in 

relevant part, that it is unlawful for any 

CPO, ‘‘unless registered under [the] Act, 

to make use of the mails or any means 

or instrumentality of interstate 

commerce’’ in connection with its 

business as a CPO.2

Part 4 of the Commission’s regulations 

governs the operations and activities of 

CPOs.3 Generally, CPOs who are, or 

who are required to be, registered with 

the Commission must deliver to 

prospective pool participants a 

Disclosure Document containing 

specified information 4—e.g., the 

business background of the CPO and its 

principals, past performance of the pool 

being offered, fees and other expenses, 

and conflicts of interest—and they must 

distribute to participants in their pools 

periodic unaudited Account Statements 

and certified Annual Reports of their 

pools’ operations.5 These CPOs also 

must make and keep specified books 

and records at their main business 

office.6 Additionally, regardless of 

registration status, all persons who 

come within the CPO definition are 

subject to certain operational 7 and 

advertising requirements 8 under Part 4, 

to all other provisions of the Act and the 

Commission’s regulations prohibiting 

fraud that apply to CPOs,9 and to all 

other relevant provisions of the Act and 

the Commission’s regulations that apply 

to all commodity interest market 

participants, such as the general 

antifraud provisions, prohibitions 

against manipulation, and the trade 

reporting requirements.10

B. Relief From CPO Regulation 

1. In General 

In implementing its statutory mandate 

to regulate the activities of CPOs, the 

Commission has endeavored to refine its 

regulations as appropriate to respond to 

changing market conditions in a manner 

consistent with customer protection. In 

addition to the issuance of relief by 

Commission staff on a case-by-case basis 

to facilitate application of regulatory 

requirements to new market conditions, 

the Commission has provided certain 

exemptions for registered CPOs from 

various of the requirements of Part 4 of 

its regulations, and where appropriate, 

it has provided exemptions from the 

CPO registration requirement itself. In 

1985, the Commission adopted 

Regulation 4.5 to exclude from the CPO 

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11See 50 FR 15868 (Apr. 23, 1985). 

12See 52 FR 41975 (Nov. 2, 1987). 

13See 57 FR 34853 (Aug. 7, 1992). 

14See 65 FR 47848 (Aug. 4, 2000). 

15See Letter from James A. Brigagliano, Esq., 

Assistant Director, SEC Division of Market 

Regulation, to Stuart M. Strauss, Esq., dated October 

24, 2006 (re: Class Relief for Exchange Traded Index 

Funds), available at: http://www.sec.gov/divisions/

marketreg/mr-noaction/etifclassrelief102406-msr.

pdf. 

16CPOs have operated Commodity ETFs on the 

basis that the units of participation or shares 

constitute securities for purposes of the U.S. federal 

securities laws and that they can be offered, sold 

and transferred as such. However, in Commission 

Staff Letters cited below at n. 17, staff stated that, 

while not necessarily agreeing with the SEC’s or the 

CPOs’ analyses or conclusions on this issue, it 

would not recommend that the Commission 

commence any enforcement action against a 

Commodity ETF or market participants in 

connection with the offer, sale and transfer of units 

of participation in the Commodity ETFs. 

17See CFTC Staff Letters 10–24 [Current Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ¶31,586 (Jun. 28, 

2010); 10–23 [Current Transfer Binder] Comm. Fut. 

L. Rep. (CCH) ¶31,584 (Jun. 7, 2010); 10–22 

[Current Transfer Binder] Comm. Fut. L. Rep. (CCH) 

¶31,583 (Jun. 3, 2010); 08–16 [2007–2009 Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ¶30,925 (Sep. 3, 

2008); 08–15 [2007–2009 Transfer Binder] Comm. 

Fut. L. Rep. (CCH) ¶30,924 (Aug. 20, 2008); 08–02 

[2007–2009 Transfer Binder] Comm. Fut. L. Rep. 

(CCH) ¶30,796 (Jan. 29, 2008); 08–01 [2007–2009 

Transfer Binder] Comm. Fut. L. Rep. (CCH) ¶30,795 

(Jan. 11, 2008); 06–26 [2005–2007 Transfer Binder] 

Comm. Fut. L. Rep. (CCH) ¶30,396 (Sep. 26, 2006); 

06–27 [2005–2007 Transfer Binder] Comm. Fut. L. 

Rep. (CCH) ¶30,397 (Sep. 26, 2006); 06–16 [2005– 

2007 Transfer Binder] Comm. Fut. L. Rep. (CCH) 

¶30,311 (Jul. 6, 2006); 06–15 [2005–2007 Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ¶30,310 (Jul. 12, 

2006); and 05–19 [2005–2007 Transfer Binder] 

Comm. Fut. L. Rep. (CCH) ¶30,164 (Nov. 10, 2005). 

The following involve actively-traded Commodity 

ETFs: CFTC Staff Letters 10–06 [Current Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ¶31,557 (Mar. 29, 

2010) and 09–39 [Current Transfer Binder] Comm. 

Fut. L. Rep. (CCH) ¶31,473 (Jul. 30, 2009). All of 

the foregoing are accessible at the Commission’s 

Internet Web site at http://www.cftc.gov. Staff 

issued these exemptions pursuant to the authority 

delegated to it by the Commission under Regulation 

140.93. 

18Regulation 4.21 requires each CPO registered or 

required to be registered to deliver to a prospective 

participant in a pool that it operates or intends to 

operate, a Disclosure Document prepared in 

accordance with Regulations 4.24 and 4.25. It 

further provides that the CPO may not accept or 

receive funds, securities or other property from a 

prospective participant unless the CPO first 

receives from the prospective participant a signed 

and dated acknowledgment stating that the 

prospective participant received a Disclosure 

Document for the pool. 

19Regulation 4.22 provides that each CPO 

registered or required to be registered must 

periodically distribute to each participant in each 

pool that it operates an Account Statement 

presented in the form of a Statement of Income 

(Loss) and a Statement of Changes in Net Asset 

Value for the prescribed period. The Account 

Statement must be distributed monthly in the case 

of pools with net assets of more than $500,000, and 

otherwise at least quarterly. CPOs of Commodity 

ETFs will generally be subject to the requirement 

to distribute Account Statements monthly. The 

financial statements must be presented in 

accordance with generally accepted accounting 

principles, consistently applied. 

20Regulation 4.23 provides, in relevant part, that 

each CPO who is registered or required to be 

registered must make and keep the books and 

records specified in the regulation ‘‘at its main 

business office.’’ 

21See the Prior Exemption Letters for the 

particular details of the Commodity ETF structure 

and offering mechanics, as well as for the 

exemptive relief and the facts and conditions upon 

which it was based. 

definition (and thus from the 

requirement to register as a CPO) certain 

otherwise highly-regulated persons in 

connection with their operation of 

specified ‘‘qualifying entities’’—i.e., 

registered investment companies, 

insurance company separate accounts, 

bank collective trust funds and 

qualifying pension plans.11 In 1987, the 

Commission adopted Regulation 4.12(b) 

to provide relief from specific 

compliance with certain disclosure, 

reporting and recordkeeping 

requirements of Part 4 for certain CPOs 

who operate pools that trade generally 

and routinely in securities instruments, 

and who intend to commit no more than 

10 percent of the value of their pools’ 

assets as initial margin or as option 

premiums for commodity interest 

trading.12 In addition, in 1992, the 

Commission adopted Regulation 4.7 to 

make available a simplified regulatory 

framework for CPOs privately offering 

commodity pools to certain highly 

accredited investors, termed ‘‘qualified 

eligible participants’’ or ‘‘QEPs.’’ 13 In 

2000, the Commission amended 

Regulation 4.7 to expand the rule’s 

availability.14 Most recently, in 2003, 

the Commission adopted Regulations 

4.13(a)(3) and (a)(4) to exempt, 

respectively, from the CPO registration 

requirement operators of pools that are 

offered to certain types of sophisticated 

investors and that restrict their 

commodity interest trading to specified 

limits and operators of pools that admit 

exclusively investors meeting a higher 

sophistication standard, but that need 

not restrict their trading. 

As is explained in greater detail 

below, the Proposal is intended to 

respond to financial market 

developments by providing relief to 

operators of commodity pools where 

units of participation in the pool are 

listed for trading on a national securities 

exchange. 

2. Commodity Exchange Traded Funds 

Historically, exchange-traded funds, 

or ETFs, have been investment 

companies registered as such under the 

Investment Company Act of 1940 either 

as unit investment trusts or as open-end 

investment companies. Shares of ETFs 

are traded by both institutional and 

retail investors on national securities 

exchanges, and in the over-the-counter 

markets. ETFs are designed to replicate 

the holdings, or correspond to the 

performance and yield of, a referenced 

securities index or a highly-correlated 

subset of the securities underlying the 

index.15 More recently, ETFs have been 

offered that seek to use active 

management of the fund’s trading. 

In 2005, registered CPOs began 

offering commodity pools whose units 

of participation (‘‘shares’’) are publiclyoffered and listed for trading on a 

national securities exchange. These 

pools have come to be known as 

‘‘Commodity ETFs’’ because they are 

designed to emulate ETFs.16 Like ETFs, 

a Commodity ETF may passively seek to 

track or replicate the performance of a 

specific commodity index, or it may 

actively trade commodity interests 

without regard to an index or 

benchmark. 

CPOs of Commodity ETFs have 

requested and received from 

Commission staff exemptive relief from 

certain of the disclosure, reporting and 

recordkeeping requirements of Subpart 

B of Part 4 of the Commission’s 

regulations (Prior Relief Letters).17 In 

each case, the CPO sought exemption 

from certain of the Disclosure Document 

delivery and acknowledgment 

requirements of Regulation 4.21,18 the 

periodic Account Statement distribution 

requirement of Regulation 4.22,19 and 

the requirement under Regulation 4.23 

to keep the pool’s books and records at 

the CPO’s main business office.20 In 

support of their requests, the CPOs 

offered substituted compliance with 

other requirements and various 

undertakings.21 The Proposal would 

codify the exemptions that Commission 

staff has granted. 

These CPOs sought relief from the 

specific Disclosure Document delivery 

and acknowledgment requirements of 

Regulation 4.21 because the prospectus 

delivery requirements under federal 

securities laws applicable to registered 

public offerings of exchange-traded 

shares (such as units of participation in 

Commodity ETFs) differ from 

Commission regulations with respect to 

timing and other aspects. Thus, the 

CPOs claimed that requiring 

simultaneous compliance with both sets 

of requirements was unnecessarily 

cumbersome, and would needlessly 

interfere with the established 

procedures for conducting a registered 

public offering of shares to be listed on 

a national securities exchange. In 

support of their requests, the CPOs 

represented that the prospectus required 

under federal securities laws would 

contain all of the information required 

to be included in a Disclosure 

Document under Regulations 4.24 and 

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54796 Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Proposed Rules 

22The Commission has said that a prospectus can 

be used to satisfy the Disclosure Document 

requirement so long as the prospectus complies 

with the Commission’s content requirements. See 

44 FR 1918, 1922 (Jan. 8, 1979). 

23The CPOs did not seek relief from Regulation 

4.21 with respect to sales of pool shares on a 

national securities exchange (i.e., sales on the 

secondary market). A CPO’s obligation to deliver a 

Disclosure Document (and the requirement to 

obtain a signed acknowledgment of receipt) extends 

to the direct purchaser of units of participation, and 

not to persons who subsequently purchase from 

that purchaser. In this regard, the Commission has 

stated that, with respect to the transfer of a 

participation unit in a commodity pool, the CPO of 

the pool ‘‘is not required to provide a Disclosure 

Document (Rule 4.21) to a person who purchases 

a unit of participation or interest in the pool from 

a pool participant if the pool operator did not solicit 

the purchase.’’ 44 FR 25658, 25659 (May 2, 1979). 

24Pursuant to Regulation 4.22(h), a representative 

duly authorized to bind the CPO must sign an oath 

or affirmation that, to the best of the knowledge and 

belief of the individual making the oath or 

affirmation, the information contained in the 

Account Statement is accurate and complete. 

25For example, in one case, the alternate 

recordkeepers were a CPO-affiliated national 

banking association, a state-regulated bank and a 

registered broker-dealer. In several other cases, the 

alternate recordkeepers were a state- and Federal 

Reserve Board-regulated bank and a registered 

broker-dealer performing distribution-related 

services. 

The CPOs also asked Commission staff to confirm 

that none of the entities selected as alternate 

recordkeepers would be deemed to be CPOs solely 

by reason of keeping required books and records of 

a pool. In response, staff noted that the Commission 

has stated that such service providers as a registered 

investment company’s depositor, sponsor, 

underwriter or investment adviser were ‘‘outside the 

CPO definition.’’ See 50 FR 15868 at 15871 (Apr. 

23, 1985). It further noted that, as the Commission 

previously has acknowledged, in determining who 

is acting in the manner contemplated by the 

statutory CPO definition, Commission staff 

typically looks at such factors as ‘‘who will be 

promoting the pool by soliciting, accepting or 

receiving from others, property for the purpose of 

commodity interest trading—and who will have the 

authority to hire (and fire) the pool’s CTA and to 

select (and change) the pool’s [futures commission 

merchant].’’ Id., citing 49 FR 4778, 4780 (Feb. 8, 

1984). 

26Public Law 107–204, 116 Stat. 745, enacted 

July 30, 2002. 

27The requirements, set forth in 15 U.S.C. 78j– 

1(m)(2) through (6) (2006), concern: Responsibility 

for appointing, compensating and overseeing the 

issuer’s public accounting firm; independence of 

audit committee members; procedures for handling 

complaints regarding accounting and auditing 

matters; and the audit committee’s authority to 

engage outside advisers. 

28 17 CFR 240.10A–3 (2010). 

29Audit committee members may not accept any 

consulting, advisory or other compensatory fee from 

the issuer, other than as a member of the board or 

of a committee thereof, and they may not be 

affiliated persons of the issuer or any of its 

subsidiaries. See 17 CFR § 240.10A–3(b)(1)(ii) 

(2010). 

30See CFTC Staff Letter 10–06 [Current Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ¶ 31,557 (Mar. 

29, 2010), for additional explanation of this point. 

4.25,22 and that, in addition to being 

made available in accordance with SEC 

prospectus delivery requirements, the 

Disclosure Document would be made 

readily available at the CPO’s Internet 

Web site.23 Further, the CPOs 

represented that in acquiring 

Commodity ETF shares, prospective and 

actual investors would utilize the 

services of registered broker-dealers, 

who would be directed by the CPO 

either to inform investors where they 

could obtain the current Disclosure 

Document or to deliver a copy of the 

Disclosure Document. 

The CPOs sought relief from the 

Account Statement delivery 

requirement for the reason that an issuer 

of exchange-traded shares held in bookentry form through the Depository Trust 

Company (such as the CPO of a 

Commodity ETF) typically does not 

readily know the identities of the 

ultimate beneficial owners of the shares. 

The CPOs argued that it would be 

unduly burdensome and costly to 

require them to ascertain, on a monthly 

basis, the identities of purchasers of 

shares in the secondary market in order 

to comply with the requirement under 

Rules 4.22(a) and (b) to deliver monthly 

Account Statements to those 

participants. Commission staff noted 

that, while traditional publicly-offered 

commodity pools typically provide for 

redemption of shares no more 

frequently than monthly, because of the 

secondary market for a Commodity 

ETF’s shares on a national securities 

exchange, ownership of those shares 

was expected to change, frequently on a 

daily basis, and even throughout the 

day. The CPOs subject to the Prior 

Exemption Letters undertook that the 

same information that would otherwise 

be provided in the monthly Account 

Statements, including net asset value 

and the certification required by 

Regulation 4.22(h),24 would be made 

readily available via the CPO’s Internet 

Web site, of which availability the 

Disclosure Document would advise 

participants. 

The CPOs also sought exemption from 

the requirement to keep the books and 

records required under Regulation 4.23 

at the CPO’s main business address, 

seeking instead to keep books and 

records with one or more banks or 

professional service providers.25 As a 

condition to granting the requested 

exemption, Commission staff required 

the CPO to provide signed 

acknowledgments by each alternate 

recordkeeper that the books and records 

may be inspected and copied by any 

representative of the Commission, the 

National Futures Association (NFA) or 

the United States Department of Justice 

and may be inspected and copied 

during normal business hours by pool 

participants. 

C. CPO Registration Relief for 

Independent Directors or Trustees of 

Commodity ETFs 

As directed by the Sarbanes-Oxley 

Act of 2002,26 the SEC has adopted rules 

requiring national securities exchanges 

to prohibit the listing of the securities of 

any issuer (e.g., units of participation in 

a Commodity ETF) that does not comply 

with specified requirements for audit 

committees.27 Pursuant to Rule 10A–3 28

under the Securities Exchange Act of 

1934 (’34 Act), in order for a national 

securities exchange to permit an issuer 

to list its securities, the members of the 

issuer’s audit committee must be 

members of its board of directors but 

otherwise independent.29 The audit 

committee is to be responsible for 

appointing, compensating and 

overseeing the public accountant 

employed to prepare the issuer’s audit 

report. National securities exchanges 

have amended their listing requirements 

to conform to, and carry out, the SEC 

rule. 

Under SEC Rule 10A–3(c)(7), a trust 

or other unincorporated organization 

that does not have a board of directors 

or persons acting in a similar capacity 

is not subject to the audit committee 

requirements if the organization’s 

activities are limited to passively 

owning or holding securities or other 

assets for the benefit of the 

organization’s security holders. 

Commodity ETFs that track commodity 

indices have relied upon this provision. 

Now that Commodity ETFs are being 

formed to trade commodity interests in 

an active manner, such Commodity 

ETFs must have independent directors 

(or trustees). Because a director (or 

trustee) of a commodity pool is 

presumed to be a CPO by virtue of the 

power such person can exercise, these 

independent directors (trustees) must 

either register as CPOs or seek 

registration relief.30

II. Relief From Compliance With 

Subpart B of Part 4 for CPOs of 

Commodity ETFs: New Regulation 

4.12(c) 

Regulation 4.12 currently contains 

paragraph (a), which states the 

Commission’s power to exempt persons 

from the provisions of Part 4, consistent 

with the public interest and subject to 

appropriate terms and conditions, and 

paragraph (b), which makes an 

exemption from certain disclosure, 

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31 In addition, the Commission is proposing 

certain technical changes to Regulation 4.12 to 

accommodate this new paragraph. Specifically, 

existing subparagraphs (b)(3) through (b)(6) of 

Regulation 4.12 (which currently set forth the filing 

requirements to claim relief under Regulation 

4.12(b)) would be re-designated as a separate 

paragraph (d) and revised to include similar filing 

requirements for CPOs seeking to claim the 

proposed new relief. 

32The claimed relief would become effective 

upon filing the notice, for registered CPOs, and 

upon CPO registration for applicants. 

33 In its Interpretation Regarding Use of Electronic 

Media by Commodity Pool Operators and 

Commodity Trading Advisors for Delivery of 

Disclosure Documents and Other Materials, 62 FR 

39104 (July 22, 1997), the Commission said ‘‘[i]n 

stating that the Disclosure Document be ‘readily 

accessible,’ the Commission requires that the 

Disclosure Document be accessible on a comparable 

basis to other promotional material on the CPO’s or 

CTA’s Web site.’’ 62 FR at 39108–39109. In other 

words, the user should not have to proceed through 

a confusing series of menus or hyperlinks in order 

to reach the desired item. The process of retrieving 

an item cannot be so burdensome that the intended 

user cannot effectively access the information in a 

manner comparable to receiving a hard-copy 

document. 

34A requirement to make each Account Statement 

readily accessible for a 30-day period corresponds 

to the existing requirement as to currency of the 

information in the Account Statement. Unlike a 

Disclosure Document that is required to be updated 

and kept current, each Account Statement is 

superseded by the succeeding Account Statement. 

This 30-day requirement does not affect the CPO’s 

obligation under Regulation 4.23(a)(12) to retain for 

a period of five years a manually signed copy of 

each Account Statement for the pool. 

35The CPOs did not request, and the Commission 

is not now proposing, relief from the requirement 

that a CPO prepare and deliver an Annual Report 

for the pool at this time. The Commission does not 

believe that the burden involved in distributing an 

Annual Report to pool participants is outweighed 

by the benefit to the participants of receiving 

certified financial statements at least annually. 

36The CPO would be required to file a separate 

claim of exemption and accompanying statement if 

additional required books and records are 

subsequently kept at a location other than the CPO’s 

main business address, or if the CPO chooses to 

keep books and records subsequently at an 

additional location other than its main business 

address. 

reporting and recordkeeping 

requirements available to registered 

CPOs whose pools, among other 

requirements, trade commodity interests 

in a manner solely incidental to their 

securities trading activities and do not 

enter into commodity interest 

transactions for which the aggregate 

initial margin and premiums exceed 10 

percent of the fair market value of the 

pool’s assets (after taking into account 

unrealized profits and losses). To make 

generally available the relief its staff has 

issued to the registered CPOs of 

Commodity ETFs, the Commission is 

proposing to add a new paragraph (c) to 

existing Regulation 4.12.31 The new 

paragraph would first specify the 

eligibility requirements for the 

exemption, and would then set forth the 

relief that an eligible CPO could claim. 

A. Eligibility 

Under proposed paragraph (c)(1), a 

registered CPO, or a person who has 

applied for CPO registration, would be 

able to claim the relief available under 

the rule with respect to any pool that 

meets the following criteria: that the 

units of participation be offered and 

sold pursuant to an effective registration 

statement under the ’33 Act, and that 

they be listed for trading on a national 

securities exchange registered as such 

under the ’34 Act.32

B. The Proposed Relief 

Proposed paragraph (c)(2) would 

specify the exemptive relief available 

under the Proposal, as well as the duties 

and obligations of the CPO who claims 

the relief. 

1. Relief From the Disclosure Document 

Delivery and Acknowledgment 

Requirement of Regulation 4.21 

Proposed paragraph (c)(2)(i) would 

provide certain relief from the 

Disclosure Document delivery 

requirement of Regulation 4.21(a), and 

relief from the signed acknowledgment 

requirement of Regulation 4.21(b) for an 

eligible CPO. The CPO claiming relief 

would be required to make the pool’s 

Disclosure Document readily accessible 

on an Internet Web site maintained by 

the CPO.33 The CPO must also comply 

with the requirements of Regulation 

4.26 to keep the Disclosure Document 

current and to correct the Disclosure 

Document as necessary. The CPO must 

clearly inform prospective pool 

participants of the availability of the 

Disclosure Document and the Internet 

address for accessing it, and to direct 

any selling agent to whom the pool 

operator sells units of participation to so 

inform prospective participants. Finally, 

the CPO must comply with all other 

requirements in Part 4 applicable to 

Disclosure Documents, which includes 

the form and content requirements of 

Regulations 4.24 and 4.25. 

Proposed paragraph (c)(2)(ii) would 

state that the CPO may satisfy the 

requirement of Regulation 4.26(b) to 

attach to the Disclosure Document a 

copy of the pool’s most current Account 

Statement and Annual Report by 

making the same readily accessible on 

an Internet Web site maintained by the 

CPO. 

2. Relief From the Periodic Account 

Statement Distribution Requirement of 

Regulation 4.22 

Proposed paragraph (c)(2)(iii) would 

provide certain substituted compliance 

relief from Regulations 4.22(a) and (b). 

In lieu of compliance with the 

requirement in the regulation that the 

CPO distribute a monthly Account 

Statement to each pool participant, the 

Proposal would permit the CPO to 

maintain the pool’s Account Statement, 

including the certification required by 

Regulation 4.22(h), readily accessible on 

a Web site operated by the CPO. This 

relief, however, would be subject to the 

CPO: (1) Keeping the Account Statement 

readily accessible on the Web site for a 

period of 30 days following the date the 

Account Statement is first posted on the 

Web site; 34 (2) indicating in the 

Disclosure Document that the 

information required to be included in 

the Account Statement will be readily 

accessible on the CPO’s Web site; and 

(3) including in the Disclosure 

Document the Internet address of the 

pool’s Account Statement. (Proposed 

Regulations 4.12(c)(2)(iii)(A) and (B)).35

3. Relief From the Books and Records 

Location Requirement of Regulation 

4.23 

Proposed paragraph (c)(2)(iv) would 

provide relief from the location 

requirement of Regulation 4.23. The 

proposed regulation would permit such 

of the required books and records as are 

not kept at the CPO’s main business 

address to be kept at the office of the 

pool’s administrator, its distributor, or a 

bank or registered broker dealer that is 

providing services to the CPO or the 

pool similar to those provided by an 

administrator or distributor. 

Under proposed paragraph 

(c)(2)(iv)(B), the CPO would be required 

to provide certain information about 

storage of books and records at the time 

that the CPO files to claim relief under 

Regulation 4.12(c). When filing the 

notice claiming relief (discussed in 

greater detail below), the CPO would 

include a statement identifying, by 

name and specified contact information, 

each person other than the CPO who 

will be keeping required pool books and 

records, and it would identify each of 

the categories of books and records, as 

set forth in various numbered 

paragraphs of Regulation 4.23, that each 

such person will be keeping. 

Proposed paragraph (c)(2)(iv)(B)(4) 

would require that the CPO’s statement 

contain representations from the CPO 

that: (1) It will promptly amend the 

statement if the contact information or 

location of any required books and 

records change; 36 (2) the CPO 

ultimately remains responsible for 

maintenance and availability of all 

books and records required under 

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54798 Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Proposed Rules 

37 If original books and records are maintained at 

a location outside the United States, the CPO is 

required to provide them at its main business office 

within seventy-two hours of a request. 

38See footnote 31. 

39 If the Proposal is adopted, the Commission will 

issue an order authorizing NFA to accept 

electronically the notices and other documents 

called for by Regulation 4.12(c). 

40The Commission has delegated to NFA the 

authority to process statements of exemption from 

registration as a CPO pursuant to Regulation 4.13. 

See 62 FR 52088 (Oct. 6, 1997). 

41 5 U.S.C. 601 et seq. 

42 47 FR 18618 (Apr. 30, 1982). 

43 Id. at 18619–20. 

Regulation 4.23; (3) it will obtain and 

provide to Commission, NFA or 

Department of Justice representatives 

within 48 hours of any request, original 

books and records from whatever 

location they are being kept; 37 and (4) 

it will disclose in the pool’s Disclosure 

Document the location of its books and 

records that are required under 

Regulation 4.23. 

Finally, proposed paragraph 

(c)(2)(iv)(C) would require that the 

statement contain an acknowledgment 

by each person keeping pool books and 

records (other than the CPO) that the 

person will be keeping the books and 

records identified by the CPO, and that 

the person will make those books and 

records available in accordance with 

Regulation 4.23. 

C. Procedure for Claiming Relief 

As noted previously 38 the Proposal 

would redesignate existing paragraphs 

(b)(3) through (b)(6) of Regulation 4.12, 

which currently set forth the filing 

requirements to claim relief under 

Regulation 4.12(b), as a separate 

paragraph (d). The Proposal would also 

revise the existing language to include 

filing requirements for CPOs claiming 

the proposed new relief (as well as those 

claiming relief under Regulation 

4.12(b)). 

As with Regulation 4.12(b), a CPO 

wishing to obtain the exemption 

provided under Regulation 4.12(c) 

would electronically file a claim of 

exemption with NFA through NFA’s 

electronic exemptions filing system, 

which claim will be effective upon 

filing. The claim would provide the 

specified identifying information, 

representations that the pool will be 

operated in compliance with the 

requirements of Regulation 4.12(c)(1), 

and specify the relief sought. As 

discussed above, the claim of exemption 

must also include the statements 

required under paragraphs (c)(2)(iii)(B) 

and (c)(2)(iii)(C) concerning books and 

records kept and maintained at a 

location other than the CPO’s main 

business office.39

Failure to meet the criteria for 

exemption as set forth in the Proposal 

will mean that the person claiming 

exemption is not exempt and that the 

full range of Part 4 requirements 

continue to apply to it. 

III. CPO Registration Relief for Certain 

Directors or Trustees of Commodity 

ETFs: New Regulation 4.13(a)(5) 

The Commission is proposing to 

provide an exemption from the 

requirement to register as a CPO for 

persons who serve as a pool’s director, 

trustee or in a similar position, solely 

for the purpose of complying with the 

audit committee requirements of SEC 

Rule 10A–3. The new exemption would 

be contained in paragraph (a)(5) of 

Regulation 4.13 (and existing paragraph 

(a)(5) would be re-numbered as 

paragraph (a)(6)). Like the other 

exemptions provided in Regulation 

4.13, the new exemption would require 

a notice to be filed electronically with 

NFA before the exemption became 

effective.40 The notice would be filed by 

the individual director or trustee. The 

pool’s registered CPO would be liable 

for any violation of the Act or of the 

Commission’s regulations by the 

director or trustee in connection with 

serving as a director or trustee of the 

pool. 

IV. Effect of Final Rulemaking on Prior 

Relief Letters 

If the requirements for obtaining relief 

in the final rule are no more restrictive 

than those set forth in a Prior Relief 

Letter, then the person or persons 

granted relief under that Prior Relief 

Letter will not be required to do 

anything further in order to continue 

operating under that relief. If, however, 

the requirements for obtaining relief in 

the final rule are more restrictive than 

those set forth in a Prior Relief Letter, 

then the person or persons granted relief 

under that Prior Relief Letter may not 

continue operating under that relief and 

will be required to file a Notice under 

the final rule. Also, if the facts and 

representations upon which the Prior 

Relief Letter was based materially 

change, the person will be required to 

file a Notice under the final rule, or 

cease engaging in the activities that 

prompted the request for the Prior Relief 

Letter. 

V. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(RFA) 41 requires that agencies, in 

proposing rules, consider the impact of 

those rules on small businesses. The 

Commission has previously established 

certain definitions of ‘‘small entities’’ to 

be used by the Commission in 

evaluating the impact of its rules on 

such entities in accordance with the 

RFA.42 With respect to CPOs, the 

Commission has previously determined 

that a CPO is a small entity if it meets 

the criteria for exemption from 

registration under current Regulation 

4.13(a)(2).43 Therefore, the requirements 

of the RFA do not apply to CPOs who 

do not meet those criteria. The 

Commission believes that the Proposal 

will not place any burdens, whether 

new or additional, on CPOs who would 

be affected hereunder. This is because 

the instant proposal, if adopted, would 

provide disclosure, reporting and 

recordkeeping relief for more CPOs. 

B. Paperwork Reduction Act 

The Proposal affects information 

collection requirements. As required by 

the Paperwork Reduction Act of 1995 

(44 U.S.C. 3507(d)), the Commission has 

submitted a copy of this section to the 

Office of Management and Budget for its 

review. 

If adopted, the Proposal will require 

existing and new CPO registrants that 

operate pools whose units of 

participation are listed on a national 

securities exchange, and that wish to 

claim the exemptive relief provided by 

the proposed amended regulations, to 

submit certain filings to the Commission 

that had not been required previously. 

As registered CPOs, persons claiming 

exemption under the Proposal will also 

be subject to the same information 

collection requirements under 

Regulations 4.22 and 4.23 as other 

registered CPOs, and the burden 

previously approved by OMB for 

Collection 3038–005 will be adjusted to 

account for the additional registrants. 

Because the information required under 

Regulation 4.21 will already have been 

collected under the requirements of the 

Federal securities laws for which 

Paperwork Reduction Act collections 

and burdens have already been 

established, the burden attributable to 

Commission Regulation 4.21 will not be 

affected. 

Collection of Information 

Rules Relating to the Operations and 

Activities of Commodity Pool Operators 

and Commodity Trading Advisors and 

to Monthly Reporting by Futures 

Commission Merchants, OMB Control 

Number 3038–0005. 

The burden associated with 

Commission Regulation 4.12 is expected 

to be increased by 5 hours: 

Estimated number of respondents: 35. 

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Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Proposed Rules 54799 

Annual responses by each 

respondent: 1. 

Estimated average hours per response: 

.5. 

Annual reporting burden: 17.5. 

This annual reporting burden of 17.5 

hours represents an increase of 5 hours 

as a result of the proposed amendments 

to Regulation 4.12. 

The burden associated with 

Commission Regulations 4.22(a) and (b) 

is expected to be increased by 1,039.5 

hours, due solely to additional, new 

registrants: 

Estimated number of respondents: 

519. 

Pools by each respondent: 3 

Annual responses by each 

respondent: 9. 

Estimated average hours per response: 

3.85. 

Annual reporting burden: 53,950.05. 

This annual reporting burden of 

53,950.05 hours represents an increase 

of 1,039.5 hours as a result of the 

proposed amendments to Regulation 

4.12. 

The burden associated with 

Commission Rule 4.23 is expected to be 

increased by 520 hours: 

Estimated number of respondents: 

516. 

Annual responses by each 

respondent: 1. 

Estimated average hours per response: 

52. 

Annual reporting burden: 26,832 

This annual reporting burden of 

26,832 hours represents an increase of 

520 hours as a result of the proposed 

amendments to Regulation 4.12. 

Organizations and individuals 

desiring to submit comments on the 

information collection requirements 

should direct them to the Office of 

Information and Regulatory Affairs, 

OMB, Room 10235, New Executive 

Office Building, Washington, DC 20503; 

Attention: Desk Officer for the 

Commodity Futures Trading 

Commission. 

The Commission considers comments 

by the public on this proposed 

collection of information in— 

• Evaluating whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the Commission, including 

whether the information will have a 

practical use; 

• Evaluating the accuracy of the 

Commission’s estimate of the burden of 

the proposed collection of information, 

including the validity of the 

methodology and assumptions used; 

• Enhancing the quality, usefulness, 

and clarity of the information to be 

collected; and 

• Minimizing the burden of collection 

of information on those who are to 

respond, including through the use of 

appropriate automated electronic, 

mechanical, or other technological 

collection techniques or other forms of 

information technology, e.g., permitting 

delivery of information via Internet Web 

sites. 

OMB is required to make a decision 

concerning the collection of information 

contained in these proposed regulations 

between 30 and 60 days after 

publication of this document in the 

Federal Register. Therefore, a comment 

to OMB is best assured of having its full 

effect if OMB receives it within 30 days 

of publication. This does not affect the 

deadline for the public to comment to 

the Commission on the proposed 

regulations. 

Copies of the information collection 

submission to OMB are available from 

the CFTC Clearance Officer, 1155 21st 

Street, NW., Washington, DC 20581, 

(202) 418–5160. 

C. Cost-Benefit Analysis 

Section 15(a) of the Act requires the 

Commission to consider the costs and 

benefits of its action before issuing a 

new regulation under the Act. By its 

terms, Section 15(a) does not require the 

Commission to quantify the costs and 

benefits of a new regulation or to 

determine whether the benefits of the 

proposed regulation outweigh its costs. 

Rather, Section 15(a) simply requires 

the Commission to ‘‘consider the costs 

and benefits’’ of its action. 

Section 15(a) further specifies that 

costs and benefits shall be evaluated in 

light of five broad areas of market and 

public concern: Protection of market 

participants and the public; efficiency, 

competitiveness, and financial integrity 

of futures markets; price discovery; 

sound risk management practices; and 

other public interest considerations. 

Accordingly, the Commission could in 

its discretion give greater weight to any 

one of the five enumerated areas and 

could in its discretion determine that, 

notwithstanding its costs, a particular 

rule was necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or to 

accomplish any of the purposes of the 

Act. 

The Proposal is intended to facilitate 

market innovation, and to rationalize 

application of Commission regulations 

to entities subject to other regulatory 

frameworks. The Commission is 

considering the costs and benefits of 

these rules in light of the specific 

provisions of Section 15(a) of the Act as 

follows: 

1. Protection of Market Participants and 

the Public 

While the proposed amendments are 

expected to lessen the burden that 

would otherwise be imposed upon 

CPOs of Commodity ETFs, any 

exemption of persons from regulatory 

requirements would be based on such 

factors as substituted compliance with 

other similar requirements. 

Accordingly, the Proposal should have 

no effect on the Commission’s ability to 

protect market participants and the 

public. 

2. Efficiency and Competition 

The Proposal is expected to benefit 

efficiency and competition by 

facilitating the listing and trading on 

national securities exchanges of units of 

participation in commodity pools. 

3. Financial Integrity of Futures Markets 

and Price Discovery 

The Proposal should have no effect, 

from the standpoint of imposing costs or 

creating benefits, on the financial 

integrity or price discovery function of 

the commodity futures and options 

markets. 

4. Sound Risk Management Practices 

The Proposal should increase the 

available range of risk management 

alternatives for CPOs and other market 

participants. 

5. Other Public Interest Considerations 

The Proposal will also take into 

account new product developments in 

the financial services industry (i.e., the 

offering of Commodity ETFs). 

After considering these factors, the 

Commission has determined to propose 

the amendments discussed above. The 

Commission invites public comment on 

its application of the cost-benefit 

considerations. Commenters also are 

invited to submit with their comment 

letters any data that they may have 

quantifying the costs and benefits of the 

Proposal. 

List of Subjects in 17 CFR Part 4 

Advertising, Brokers, Commodity 

futures, Commodity pool operators, 

Commodity trading advisors, Consumer 

protection, Reporting and recordkeeping 

requirements. 

For the reasons presented above, the 

Commission proposes to amend Chapter 

I of Title 17 of the Code of Federal 

Regulations as follows: 

PART 4—COMMODITY POOL 

OPERATORS AND COMMODITY 

TRADING ADVISORS 

1. The authority citation for part 4 

continues to read as follows: 

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54800 Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Proposed Rules 

Authority: 7 U.S.C. 1a, 2, 4, 6b, 6c, 6l, 6m, 

6n, 6o, 12a and 23. 

2. Section 4.12 is amended by: 

a. Revising the heading of paragraph 

(b); 

b. Revising the introductory text of 

paragraph (b)(1); 

c. Amending paragraph (b)(2) by 

adding a heading; 

d. Redesignating paragraphs (b)(3) 

through (b)(6) as paragraphs (d)(1) 

through (d)(4) and revising the 

redesignated paragraphs; and 

e. Adding new paragraph (c), to read 

as follows: 

§ 4.12 Exemption from provisions of part 

4. 

* * * * * 

(b) Exemption from Subpart B for 

certain commodity pool operators based 

on amount and nature of commodity 

interest trading. (1) Eligibility. Subject to 

compliance with the provisions of 

paragraph (d) of this section, any person 

who is registered as a commodity pool 

operator, or has applied for such 

registration, may claim any or all of the 

relief available under paragraph (b)(2) of 

this section if: 

* * * * * 

(2) Relief available to pool operator. 

* * * 

(c) Exemption from Subpart B for 

certain commodity pool operators based 

on listing of pool participation units for 

trading on a national securities 

exchange. (1) Eligibility. Subject to 

compliance with the provisions of 

paragraph (d) of this section, any person 

who is registered as a commodity pool 

operator, or has applied for such 

registration, may claim any or all of the 

relief available under paragraph (c)(2) of 

this section if the units of participation 

in the pool for which it makes such 

claim: 

(i) Will be offered and sold pursuant 

to an effective registration statement 

under the Securities Act of 1933; and 

(ii) Will be listed for trading on a 

national securities exchange. 

(2) Relief available to pool operator. 

The commodity pool operator of a pool 

whose units of participation meet the 

criteria of paragraph (c)(1) of this 

section may claim the following relief: 

(i) In the case of § 4.21, exemption 

from the specific requirements of that 

section, Provided, however, that the 

pool operator: 

(A) Cause the pool’s Disclosure 

Document to be readily accessible on an 

Internet Web site maintained by the 

pool operator; 

(B) Cause the Disclosure Document to 

be kept current in accordance with the 

requirements of § 4.26(a); 

(C) Clearly inform prospective pool 

participants of the Internet address of 

such Web site and direct any broker, 

dealer or other selling agent to whom 

the pool operator sells units of 

participation in the pool to so inform 

prospective pool participants; and 

(D) Comply with all other 

requirements applicable to pool 

Disclosure Documents under Part 4. The 

pool operator may satisfy the 

requirement of § 4.26(b) to attach to the 

Disclosure Document a copy of the 

pool’s most current Account Statement 

and Annual Report if the pool operator 

makes such Account Statement and 

Annual Report readily accessible on an 

Internet Web site maintained by the 

pool operator. 

(ii) In the case of § 4.22, exemption 

from the Account Statement distribution 

requirement of that section; Provided, 

however, that the pool operator: 

(A) Cause the pool’s Account 

Statements, including the certification 

required by § 4.22(h), to be readily 

accessible on an Internet Web site 

maintained by the pool operator within 

30 calendar days after the last day of the 

applicable reporting period and 

continuing for a period of not less than 

30 calendar days; and 

(B) Cause the Disclosure Document 

for the pool to clearly indicate: 

(1) That the information required to 

be included in the Account Statements 

will be readily accessible on an Internet 

Web site maintained by the pool 

operator; and 

(2) The Internet address or URL of 

such Web sitse. 

(iii) In the case of § 4.23, exemption 

from the requirement to keep the books 

and records specified by that section at 

the pool operator’s main business office; 

Provided, however, that: 

(A) The books and records that the 

pool operator will not keep at its main 

business office will be maintained by 

one or more of the following: The pool’s 

administrator, distributor or custodian, 

or a bank or registered broker or dealer 

acting in a similar capacity with respect 

to the pool; 

(B) At the time it files electronically 

with the National Futures Association 

the notice required under paragraph (d) 

of this section, the pool operator files a 

statement that: 

(1) Identifies the name, main business 

address, and main business telephone 

number of the person(s) who will be 

keeping required books and records in 

lieu of the pool operator; 

(2) Sets forth the name and telephone 

number of a contact for each person 

who will be keeping required books and 

records in lieu of the pool operator; 

(3) Specifies, by reference to the 

respective paragraph of § 4.23, the books 

and records that such person will be 

keeping; and 

(4) Contains representations from the 

pool operator that: 

(i) It will promptly amend the 

statement if the contact information or 

location of any of the books and records 

required to be kept by § 4.23 changes, by 

identifying in such amendment the new 

location and any other information that 

has changed; 

(ii) It remains responsible for ensuring 

that all books and records required by 

§ 4.23 are kept in accordance with 

§ 1.31; 

(iii) Within forty-eight hours after a 

request by a representative of the 

Commission, it will obtain the original 

books and records from the location at 

which they are maintained, and provide 

them for inspection at the pool 

operator’s main business office; 

Provided, however, that if the original 

books and records are permitted to be, 

and are maintained, at a location 

outside the United States, its territories 

or possessions, the pool operator will 

obtain and provide such original books 

and records for inspection at the pool 

operator’s main business office within 

seventy-two hours of such a request; 

and 

(iv) It will disclose in the pool’s 

Disclosure Document the location of its 

books and records that are required 

under § 4.23. 

(C) At the time it files the notice 

required under paragraph (d) of this 

section, the pool operator files 

electronically with the National Futures 

Association a statement from each 

person who will be keeping required 

books and records in lieu of the pool 

operator wherein such person: 

(1) Acknowledges that the pool 

operator intends that the person keep 

and maintain required pool books and 

records; 

(2) Agrees to keep and maintain such 

required books and records in 

accordance with § 1.31 of this chapter; 

and 

(3) Agrees to keep such required 

books and records open to inspection by 

any representative of the Commission or 

the United States Justice Department in 

accordance with § 1.31 of this chapter 

and to make such required books and 

records available to pool participants in 

accordance with § 4.23 of this chapter. 

(d)(1) Notice of claim for exemption. 

Any registered commodity pool 

operator, or applicant for commodity 

pool operator registration, who desires 

to claim the relief available under 

paragraph (b) or (c) of this section must 

file electronically a claim of exemption 

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Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Proposed Rules 54801 

1 75 FR 41775 (July 19, 2010). 

with the National Futures Association 

through its electronic exemption filing 

system. Such claim must: 

(i) Provide the name, main business 

address and main business telephone 

number of the registered commodity 

pool operator, or applicant for such 

registration, making the request; 

(ii) Provide the name of the 

commodity pool for which the request 

is being made; 

(iii) Contain representations, as 

appropriate, that: 

(A) The pool will be operated in 

compliance with paragraph (b)(1)(i) of 

this section and the pool operator will 

comply with the requirements of 

paragraph (b)(1)(ii) of this section; or 

(B) The pool will be operated in 

compliance with paragraph (c)(1) of this 

section; 

(iv) Specify the relief sought under 

paragraph (b)(2) or (c)(2), as the case 

may be, of this section; and 

(v) Be filed by a representative duly 

authorized to bind the pool operator. 

(2)(i) The claim of exemption must be 

filed before the date the commodity 

pool first enters into a commodity 

interest transaction. 

(ii) The claim of exemption shall be 

effective upon filing; Provided, however, 

That any exemption claimed hereunder: 

(A) Will not be effective unless and 

until the notice required by this 

paragraph (d) contains all information 

called for herein and any statements 

required under paragraph (c)(2)(iii) of 

this section have been provided; and 

(B) Will cease to be effective upon any 

change which would render the 

representations made pursuant to 

paragraph (d)(1)(iii) of this section 

inaccurate or the continuation of such 

representations false or misleading. 

(3)(i) If a claim of exemption has been 

made under paragraph (b)(2)(i) of this 

section, the commodity pool operator 

must make a statement to that effect on 

the cover page of each offering 

memorandum, or amendment thereto, 

that it is required to file with the 

National Futures Association pursuant 

to § 4.26. 

(ii) If a claim of exemption has been 

made with respect to paragraph 

(b)(2)(iii) of this section, the pool 

operator must make a statement to that 

effect on the cover page of each annual 

report that it is required to file with the 

National Futures Association pursuant 

to § 4.22(c). 

(4)(i) Any claim of exemption 

effective hereunder shall be effective 

only with respect to the pool for which 

it has been made. 

(ii) The effectiveness of such claim 

shall not affect the obligations of the 

commodity pool operator to comply 

with all other applicable provisions of 

this part 4, the Act and the 

Commission’s regulations issued 

thereunder with respect to the pool and 

any other pool the pool operator 

operates or intends to operate. 

3. Section 4.13 is amended by: 

a. Removing the word ‘‘or’’ at the end 

of paragraph (a)(3)(iv); 

b. Removing the period at the end of 

paragraph (a)(4)(ii)(B) and adding ‘‘; or’’; 

c. Redesignating paragraph (a)(5) as 

paragraph (a)(6), and revising newly 

designated paragraph (a)(6)(i) 

introductory text; 

d. Adding new paragraph (a)(5); and 

e. Revising paragraphs (b)(1)(ii) and 

(b)(2), to read as follows: 

§ 4.13 Exemption from registration as a 

commodity pool operator. 

* * * * * 

(a) * * * 

(5) The person is acting as a director 

or trustee with respect to a pool whose 

operator is registered as a commodity 

pool operator and is eligible to claim 

relief under § 4.12(c) of this chapter, 

Provided, however, that: 

(i) The person acts in such capacity 

solely to comply with a requirement 

under the Federal securities laws that 

the pool have an audit committee 

comprised exclusively of independent 

directors or trustees; 

(ii) The person has no power or 

authority to manage or control the 

operations or activities of the pool 

except as necessary to comply with such 

requirement; and 

(iii) The registered pool operator of 

the pool is and will be liable for any 

violation of the Act or the Commission’s 

regulations by the person in connection 

with the person’s serving as a director 

or trustee with respect to the pool. 

(6)(i) Eligibility for exemption under 

paragraph (a)(1), (a)(2), (a)(3) or (a)(4) of 

this section is subject to the person 

furnishing in written communication 

physically delivered or delivered 

through electronic transmission to each 

prospective participant in the pool: 

* * * 

* * * * * 

(b)(1) * * * 

(ii) Contain the section number 

pursuant to which the operator is filing 

the notice (i.e., § 4.13(a)(1), (a)(2), (a)(3), 

(a)(4) or (a)(5), or both (a)(3) and (a)(4)) 

and represent that the pool will be 

operated in accordance with the criteria 

of that paragraph or paragraphs; and 

* * * * * 

(2) The person must file the notice by 

no later than the time that the pool 

operator delivers a subscription 

agreement for the pool to a prospective 

participant in the pool; Provided, 

however, that in the case of a claim for 

relief under § 4.13(a)(5), the person must 

file the notice by the later of the 

effective date of the pool’s registration 

statement under the Securities Act of 

1933 or the date on which the person 

first becomes a director or trustee; and 

Provided, further, that where a person 

registered with the Commission as a 

commodity pool operator intends to 

withdraw from registration in order to 

claim exemption hereunder, the person 

must notify its pool’s participants in 

written communication physically 

delivered or delivered through 

electronic transmission that it intends to 

withdraw from registration and claim 

the exemption, and it must provide each 

such participant with a right to redeem 

its interest in the pool prior to the 

person filing a notice of exemption from 

registration. 

* * * * * 

Issued in Washington, DC, on September 1, 

2010 by the Commission. 

David Stawick, 

Secretary of the Commission. 

[FR Doc. 2010–22395 Filed 9–8–10; 8:45 am] 

BILLING CODE P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 16 

RIN 3038–AC63 

Account Ownership and Control 

Report 

AGENCY: Commodity Futures Trading 

Commission (‘‘Commission’’). 

ACTION: Extension of comment period. 

SUMMARY: The Commission is extending 

the comment period for the Notice of 

Proposed Rulemaking (‘‘NPRM’’) that 

calls for the collection of ownership, 

control and related information.1 The 

new deadline for submitting public 

comments is October 7, 2010. 

DATES: Written comments must be 

received on or before October 7, 2010. 

ADDRESSES: Comments should be sent to 

David Stawick, Secretary, Commodity 

Futures Trading Commission, Three 

Lafayette Centre, 1155 21st Street, NW., 

Washington, DC 20581. Comments may 

be submitted via e-mail at 

OCR@cftc.gov. ‘‘Account Ownership and 

Control Report’’ must be in the subject 

field of responses submitted via e-mail, 

and clearly indicated on written 

submissions. Comments may also be 

submitted by connecting to the Federal 

eRulemaking Portal at http:// 

mstockstill on DSKH9S0YB1PROD with PROPOSALS