CFTC Relief Eliminates Dual US Regulation of Certain Investment Managers
Why it is Significant
- Relief Re-Instates Prior 2012 Regulatory Exemption from CFTC Registration for Most Registered Investment Advisers to Private Funds
- Significant Compliance Cost Savings Anticipated from Elimination of Duplicative Regulatory Regimes
- Ability for RIAs to Private Funds to Increase Exposure to Commodity Interests without
Consistent with the ongoing trend towards deregulation of the investment management industry in the United States, the Commodity Futures Trading Commission (CFTC) Market Participants Division (MPD) issued a no-action letter on December 19, 2025, to the Managed Funds Association (NAL), stating that it would not recommend that the CFTC commence enforcement action against Securities and Exchange Commission (SEC) registered investment advisers which operate commodity pools that are privately offered solely to qualified eligible persons (QEP Manager), for (1) failing to register with the CFTC as a commodity pool operator (CPO) or commodity trading advisor (CTA) or (2) withdrawing from such registration(s), subject to certain conditions. The NAL would permit QEP Managers to avoid CPO and CTA registration, or to withdraw from such registrations, pending formal CFTC rulemaking to reinstate the former CPO registration exemption set forth in CFTC Reg. § 4.13(a)(4), which was rescinded in 2012.
The NAL is limited to QEP Managers that: (1) are SEC registered investment advisers; (2) offer pool interests solely in nonpublic offerings under the Securities Act of 1933, as amended, without offering to the public in the U.S. (other than an offering pursuant to Rule 506(c) thereunder); and (3) each pool participant is a qualified eligible person. Unfortunately, the NAL is not available to advisers to private funds that rely on exemptions from registration, such as “exempt reporting advisers.”
In order to rely on the NAL, QEP Managers must file Form PF with the SEC with respect to the pool covered by the NAL, have a reasonable belief that all pool participants are QEPs at the time of investment and file notice of reliance on the NAL via email with the CFTC. The NAL also confirmed that CPOs deregistering solely due to the NAL are not subject to mandatory redemption offer requirements under CFTC Reg. § 4.13(e).
