DIVISION OF 

TRADING AND MARKETS 

COMMODITY FUTURES TRADING COMMISSION 

2033 K STREET, N.W., WASHINGTON, D.C. 20581 

T&H 88-5 

February 2, 1988 

Re: Application of Rule 4.14(a) (8) to CTA of Foreign Funds 

Dear 

This is in response to your letter dated December 15, 1987, as supplenented by your letter dated January 13, 1988, whereby on behalf of "A" and 

"B" (collectively the "Advisers") you requested relief from cormodity trading 

advisor ( "CTA") registration. 

Based upon the representations nade in your letters, we understand the 

facts to be as follavs: Each Adviser is registered with the Securities and 

Exchange Ccmnission ("SEC") as an investment adviser under the Investment 

Advisers Act of 1940, has its principal place of business in the United 

States, and primarily is engaged in the business of acting as investment 

adviser to a number of investment companies registered as such with the SEC 

under the Investroent Carpany Act of 1940. Certain of these coopanies have 

filed a notice of eligibility for exclusion fran the definition of the term 

"ccmrodity pool operator" under Rule 4.5, 17 C.F .R. §4 .5 (1987) , and prior to 

providing commodity interest trading advice to any such investment carpany an 

Adviser will file a notice of exemption from CTA registration under Rule 

4.14(a) (8), 52 Fed. Reg. 41975 (November 2, 1987). As required by that rule, 

the notice must represent that the person claiming relief thereunder 

qualifies to take such action -- i.e., that it is a registered investrnent 

adviser -- and that it will corrply with the criteria of the rule such that: 

(1} its ccmrodity interest trading advice will be directed solely to, and for 

the sole use of, Rule 4.5 trading vehicles; (2) its com:rodity interest 

trading advice will be solely incidental to its business of providing 

securities advice to each such trading vehicle; and (3) it '\llill employ only 

such strategies as are consistent with eligibility status under Rule 4. 5 . 

Further, the person may not otherwise hold itself out as a CTA. 

In addition, the Advisers intend to provide securities cind comrodi ty 

interest trading advice to various investment carpanies which are organized 

under the laws of, and maintain their principal places of business in, the 

Grand Duchy of Luxerobaurg (the "Funds"). It is with respect to these Funds 

that the Advisers seek relief fran CTA registration. 

In support of this request by your letters you further represented 

that: (1) the governing dOC'I.llrents of each Fund will prohibit avnership of 

the Fund's shares, either directly or indirectly, by any "United States 
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person"; 1/ (2) each Fund will be operated pursuant to the criteria of Rule 

4.5(c) (2)-;- although because of it.s foreign nature the Fund will not (and 

absent an exemption from the SEC cannot) register as an invest:Ioont canpany 

under the Investment Company Act of 1940 and therefor the Fund is not an 

eligible person or qualifying entity under Rule 4. 5 (a) or (b) ; and ( 3) an 

Adviser will prmride commodity interest trading advice in a manner solely 

incidental to its business of providing securities advice to a Fund. Based 

upon the foregoing, and as previously noted above the registration of each 

Adviser as an investment adviser and the foreign nature of each Fund, the 

Division will not recommend that the Commission take any enforcement action 

for failure to register as a Cl'A against either "A" or "B" in connection with 

its providing corrro:x:1ity interest trading advice to a Fund. This position is, 

hCMever, subject to compliance with the conditions that: (1) neither Adviser 

otherwise holds itself out as a CTA to a Fund or the prospective and actual 

investors therein; 2/ and (2) each Adviser will submit to such special calls 

as the Division may make of it to derronstrate canpliance with the terms and 

conditions of this "no-action" position. 

We note that this letter does not excuse any Adviser from compliance 

with any other applicable requirerrents contained in the Cammodity Exchange 

Act or in the Ccm:nission' s regulations thereunder. For example, each would 

remain subject to the anti·-fraud provisions of Section 4o of the Act, 7 

u.s.c. §6o (1982), and to the reporting requirerrents fortraders set forth in 

Parts 15,-18 and 19 of the Commission's regulations, 17 C.F.R. Parts 15, 18 

and 19 (1987). Further, the position we have taken herein is solely 

applicable to an Adviser in connection with its involvement in the activities 

of a Fund. 

This letter is based upon the representations that have been made to 

us and is subject to canpliance with certain conditions set forth above. Any 

different, changed or omitted facts or conditions might require us to reach a 

different conclusion. In this connection, we request that you notify us 

1./ You defined this tenn to include "a citizen or resident of the United 

States as well as a partnership, corporation, estate or trust organized 

or existing under the laws of the United States or any state." 

!:._/ Cf. Rule 4.14 (a) (8), which makes an exemption from CTA registration 

available to a registered investment advisor to a Rule 4.5 trading 

vehicle -- ~. , a registered investment canpany -- under criteria 

similar to those set forth above. 52 Fed. Reg. 41975 (November 2, 1987). 
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immediately in the event the operations of any Adviser or a Fund, including a 

Fund's shareholder composition and operating criteria, change in any way from 

that as represented to us. 

BSG/mad 

Very truly yours, 

Andrea M. Corcoran 

Director 

cc: Daniel A. Driscoll, National FUtures Association