On October 15, 2020, the U.S. Commodity Futures Trading Commission (CFTC) approved amendments to CFTC Regulation 3.10(c), which exempts non-U.S. commodity pool operators (CPOs) from registering with the CFTC with respect to non-U.S. commodity pools operated by the non-U.S. CPO that are not marketed or sold in the United States.1
The CFTC amendments will:
- allow a non-U.S. CPO to rely on the Rule 3.10(c) CPO registration exemption with respect to qualifying non-U.S. commodity pools, while relying on different CPO registration exemptions or exclusions, or registering as a CPO, with respect to other commodity pools
- adopt a safe harbor by which a non-U.S. CPO of a non-U.S. commodity pool can rely on Regulation 3.10(c) if it satisfies certain enumerated factors
- permit U.S. affiliates of non-U.S. CPOs relying on Rule 3.10(c) to make seed investments without adversely affecting the non-U.S. CPO’s ability to rely on Rule 3.10(c)
- clarify that commodity interest transactions entered into by a qualifying offshore commodity pool operated pursuant to Rule 3.10(c) need not be cleared through a registered futures commission merchant (FCM), unless the commodity interest transaction is required by regulation or intended by the counterparties to be cleared
The amendments will go into effect 60 days after the final rules are published in the Federal Register, which has not occurred as of the date of this Sidley Update.
1 The “voting draft” of the CFTC’s final rule release is available at https://www.cftc.gov/media/5061/votingdraft101520Part3/download.
