CFTC Breathes New Life into QEP Exemption: Relief for CPOs Announced

On December 19, 2025, the Market Participants Division (“MPD”) of the Commodity Futures Trading Commission (“CFTC”) issued a no-action letter (the “No-Action Letter”) permitting commodity pool operators (“CPOs”) registered with the Securities and Exchange Commission (“SEC”) as investment advisers to claim relief from CPO and commodity trading advisor (“CTA”) registration, subject to certain conditions. The relief afforded by the No-Action Letter is in response to a request by the Managed Funds Association (the “MFA”), which further asked that such no-action position continue until such time that the CFTC completes formal rulemaking to reinstate the exemption from registration formerly set forth in CFTC regulation 4.13(a)(4) (the “QEP Exemption”), which the CFTC adopted in 2003 and rescinded in 2012. Background The Commodity Exchange Act requires that a CPO must register with the CFTC absent availability of an exemption. A CPO is a person or entity that operates, and solicits funds for, a commodity pool, typically a general partner, manager or sponsor of the commodity pool. A commodity pool is an enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures or options on futures, retail off-exchange forex contracts, or swaps, or to invest in another commodity pool. The CFTC had originally adopted the QEP Exemption in former CFTC regulation 4.13(a)(4) in 2003 to encourage and facilitate participation in the commodity interest markets by collective investment vehicles and their advisers, with the added benefit of increased liquidity for all market participants. Designed for investment managers of private funds that are offered solely to sophisticated investors, former CFTC regulation 4.13(a)(4) was enacted to facilitate participation in commodity markets by eliminating duplicative and conflicting regulatory requirements applicable to SEC-registered private fund managers. The QEP Exemption afforded by former CFTC regulation 4.13(a)(4) applied to operators of collective investment vehicles offered solely to qualified eligible persons (“QEPs”), as defined in CFTC regulation 4.7(a)(6). However, in the wake of the Dodd–Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the CFTC determined that the sources of risk delineated in the Dodd-Frank Act that were applicable to private funds generally also applied to commodity pools. To provide the CFTC with similar information to address these risks, the CFTC decided to require CPO registration of private fund managers previously exempt from CPO registration under former CFTC regulation 4.13(a)(4) and to further require reporting of information comparable to that required in Form PF, which the CFTC had previously adopted jointly with the SEC. As a result, in February 2012 the CFTC decided to rescind the QEP Exemption. Accordingly, private fund managers which would have been exempt from CPO registration under former CFTC regulation 4.13(a)(4) would have to rely on another exemption from registration or alternatively would have to register as a CPO. The No-Action Letter Based on representations and arguments made by the MFA, and supported by the MPD’s analysis of the CFTC’s 2003 rationale for adopting the QEP Exemption as well as MPD’s experience since the recission of the QEP Exemption in 2012, the MPD found that a no-action position was warranted as an interim measure to reduce the burdens on certain private fund managers to institutional and high net worth individuals while the CFTC considers whether to reinstate the QEP Exemption. Specifically, the No-Action Letter states that the MPD will not recommend that the CFTC commence enforcement action against any person that (A) fails to register with the CFTC as a CPO, or (B) withdraws from registration with the CFTC as a CPO, subject to satisfaction of the following conditions: The person is currently, or would be, until such time as the CFTC may promulgate regulations to reinstate the QEP Exemption, required to be registered with the CFTC as a CPO for its commodity pool operations, or relies upon an existing exemption from such CPO registration in CFTC regulation 4.13; The person is registered with the SEC as an investment adviser; The interests of the pool operated by the person are exempt from registration under the Securities Act and sold without marketing to the public in the United States (provided that the prohibition on marketing to the public shall not apply to a pool that is also offered pursuant to 17 CFR 230.506(c)); The person reasonably believes at the time of investment, or at the time of relying on this no-action position from CPO registration, that each pool participant meets the QEP definition under CFTC regulation 4.7(a)(6); The person files a Form PF with the SEC with respect to the pool(s) covered by this no action position, which is received by the CFTC; and The person complies with the requirements of CFTC regulation 4.13(b) (except paragraph (b)(2)) and 4.13(c) as if reliance on the no-action position contained herein were an exemption from registration under CFTC regulation 4.13(a), with the exception that notices documenting reliance on this no-action position are filed via email to mpdnoaction@cftc.gov; provided that if a notice claiming this no-action position is materially complete, it should be considered effective upon emailing to the MPD. In addition, solely with respect to the pools for which a CPO qualifies for relief under the No-Action Letter and for which a CPO chooses to rely on this no-action position from CPO registration, the No-Action Letter provides that MPD will not recommend that the CFTC commence an enforcement action against any such CPO, if such CPO fails to register, or withdraws from registration, as a commodity trading advisor (“CTA”). Finally, as requested by MFA, the No-Action Letter includes a confirmation from MPD that a CPO that deregisters as such as a result of the No-Action Letter would not be required to comply with the requirements of CFTC regulation 4.13(e)(2), which would otherwise require such CPOs to offer all investors in the relevant pools an automatic right to redeem their interests in the pools in connection with such deregistration, solely with respect to pools for which such CPO is relying on the No-Action Letter. It is important to note that the No-Action Letter imposes certain new conditions not found in former CFTC regulation 4.13(a)(4). Most notably, relief is only available to a registered investment adviser that files a Form PF with respect to the pools covered by the No-Action Letter. Some pools sold exclusively to QEPs (e.g., pools that are excluded from the definition of “investment company” under Section 3 of the Investment Company Act (the “ICA”), for any reason other than reliance on Section 3(c)(1) or 3(c)(7) of the ICA, such as funds predominantly engaged in investing in real estate and exempt under 3(c)(5)(c) of the ICA) are not required to be reported on Form PF. Accordingly, an adviser would not be able to avail itself of the relief afforded by the No-Action Letter as to that pool. In addition, the No-Action Letter does not provide CTA registration relief for a CTA unless that CTA is also the CPO of the same commodity pool. The No-Action Letter does not change the CTA registration or exemption analysis for a third-party CTA to a commodity pool whose CPO claims the relief. CPOs that rely on the relief and are also registered CTAs because of their third-party pool and separately managed account businesses will need to remain registered as CTAs as well as members of the National Futures Association, the industry-wide, self-regulatory organization for the US futures and derivatives industry. Finally, until the CFTC completes formal rulemaking to reinstate the QEP Exemption, it is unclear whether the final CFTC rules will largely dovetail with the terms of the No-Action Letter or if the rules will deviate from the No-Action Letter in any material respect.