CFTC Staff Issues No-Action Relief from CPO/CTA Registration for Certain Private Fund Managers and Credit Risk Transfer Transactions

The staff of the Market Participants Division (the “Staff”) of the Commodity Futures Trading Commission (CFTC) have issued two no-action letters that provide targeted relief from commodity pool operator (CPO) and commodity trading advisor (CTA) registration for certain private fund managers and credit risk transfer transactions.

I. No-Action Relief for Certain Private Fund Managers to Qualified Eligible Persons

On December 19, 2025, the Staff issued CFTC Staff No-Action Letter 25-50,[1] providing no-action relief from CPO and CTA registration requirements for certain private fund managers whose funds are offered solely to qualified eligible persons (QEP).[2] The letter responds to a request from the Managed Funds Association (MFA)[3] and is intended to operate as an interim measure while the CFTC considers whether to reinstate, through formal rulemaking, the former exemption for QEPs under former CFTC Regulation 4.13(a)(4) (the “QEP Exemption”), which was rescinded in 2012.[4]

Background

Prior to its rescission in 2012, the QEP Exemption exempted from CPO registration operators of commodity pools offered exclusively to QEPs on the basis that such sophisticated investors possessed the resources and expertise necessary to evaluate investment risks without the protections afforded by the CPO regulatory framework. However, following the enactment of the Dodd-Frank Act in 2010, the CFTC determined that commodity pools posed similar risks to private funds and sought to enhance its oversight of private fund activity, which included rescinding the QEP Exemption, thereby requiring the registration of certain previously exempt CPOs.

In the no-action request, MFA asserted that the QEP Exemption should be reinstated but acknowledged that this would take time given the need for formal rulemaking. In the interim, the MFA requested that no-action relief be provided from CPO and CTA registration for a limited class of CPOs and CTAs that:

1. Are registered with the Securities and Exchange Commission (SEC) as investment advisers;
2. Offer interests in pools solely through non-public offerings under the Securities Act of 1933 (“Securities Act”); and
3. Limit participation in such pools exclusively to QEPs.

No-Action Relief

The Staff agreed to grant no-action relief pending the CFTC’s determination on whether to reinstate the QEP Exemption. Under the no-action relief, the Staff would not recommend that the CFTC pursue enforcement action against any person that fails to register as a CPO or withdraws its CPO registration, so long as the following conditions are satisfied:  

1. The person is currently, or would be, required to register with the CFTC as a CPO or rely on an applicable exemption under CFTC Regulation 4.13;
2. The person is registered with the SEC as an investment adviser (exempt reporting advisers, subject to lighter SEC registration obligations, would be ineligible);
3. Interests in the pool operated by the person are only offered through non-public offerings under the Securities Act (but excluding certain offerings made under Rule 506 of Regulation D under the Securities Act)[5];
4. The person reasonably believes that each pool participant is a QEP;[6]
5. The person files Form PF with the SEC with respect to the relevant pool, a copy of which is then received by the CFTC; and
6. The person files notice of reliance on this no-action position with the National Futures Association through its electronic filing system and with the CFTC via email at mpdnoaction@cftc.gov. The person must comply with the requirements of CFTC Regulations 4.13(b) (except paragraph (b)(2)) and 4.13(c) as if reliance on this no-action position were an exemption from CPO registration under CFTC Regulation 4.13(a).    

The Staff also confirmed that, for fund managers withdrawing from CPO registration solely in reliance on this no-action position, the requirement under CFTC Regulation 4.13(e) to offer existing investors a mandatory redemption right would not apply.[7] However, fund managers relying on this no-action position should still consider other investor notification obligations that may apply.

Key Takeaways

This no-action position provides meaningful relief for certain SEC-registered private fund managers whose pools satisfy the listed requirements until such time as the CFTC determines whether or not to reinstate the QEP Exemption. Additionally, this no-action position reflects a continued push for regulatory harmony between the CFTC and the SEC, and a willingness by the Staff to eliminate duplicative or burdensome regulation, specifically in circumstances involving sophisticated investors.

II.  No-Action Relief for Operators of Certain Credit Risk Transfer Transactions

On November 21, 2025, the Staff issued No-Action Letter 25-37,[8] providing no-action relief from CPO registration for operators of special purpose vehicles (SPVs) used in credit risk transfer transactions (“CRT transactions”) conducted by certain regulated financial institutions. The letter responds to a request from the Structured Finance Association[9] and clarifies when SPV operators may rely on the CPO registration exemption under CFTC Regulation 4.13(a)(3) (the “4.13(a)(3) CPO Exemption”).

Background

CRT transactions are used by certain regulated banks to manage the risks associated with specific loans, receivables, leases and related assets, and other financial exposures on their balance sheets. By transferring these risks to sophisticated investors, the banks reduce their risk-weighted assets and, in turn, their minimum capital requirements.

CRT transactions can be structured in various ways but typically involve: (1) formation of an SPV; (2) issuance by the SPV of debt securities to sophisticated investors; and (3) the SPV entering into a credit default swap (CDS) or similar risk-sharing arrangement with the sponsoring bank.

The 4.13(a)(3) CPO Exemption applies to certain operators of pools engaging only in a de minimis amount of commodity interest transactions and otherwise complying with the rule.

No-Action Relief

To rely on the 4.13(a)(3) CPO Exemption, four elements must be met.[10] The Staff’s analysis centered on the fourth element, known as the “marketing prong,” which requires that “participations in the pool are not marketed as or in a vehicle for trading in the commodity futures or commodity options markets.”[11] The Structured Finance Association noted in its letter that the other three elements were satisfied.

In connection with the marketing prong of the 4.13(a)(3) CPO Exemption, the CFTC had previously published a list of seven factors used to evaluate whether or not a pool is being marketed as a vehicle for trading in commodity interests, the most relevant to CRT transactions being “whether the [swap] transactions engaged in by the fund or on behalf of the fund will directly or indirectly be its primary source of potential gains and losses.”[12]

The no-action request stated that the disclosures and marketing materials for CRT transactions will “focus on the reference assets rather than the risks and rewards of the swap.” Based on the representations contained in the no-action request, the disclosures and marketing materials will specifically focus on the fact that the notes issued by the SPV are debt securities with a stated rate of return that create exposures to the credit risk of the underlying reference assets, and will not describe the SPVs as vehicles for trading in swaps. Moreover, the no-action request notes that the CDS is merely a tool to transfer risk of the underlying reference assets to the SPV and, in turn, to the investors in the SPV, the purpose and operations of such SPVs will be limited to those necessary to support the CRT transactions, and the SPVs will not hold additional commodity interests other than the CDS necessary to effectuate the CRT transactions.

Based on these representations, the Staff determined that the CRT transaction structure is distinguishable from traditional commodity pools that have active management and trading strategies that involve commodity interests (e.g., futures, options, and swaps) to drive a pool’s performance. The purpose and function of the CRT transactions, by contrast, is to hedge the credit risk of assets actually owned by the sponsoring banks and to obtain capital relief, not to create a speculative pooled investment vehicle. As a result, the Staff granted the requested no-action relief where (i) the SPV is prohibited from holding commodity interests other than the CDS necessary to accomplish the CRT transaction; (ii) the disclosures and marketing materials focus on the quality and performance of the underlying assets; and (iii) the following conditions are met:

1. The CRT transaction only hedges the risks of assets owned by the bank.
2. The bank, SPV, and/or any affiliate must maintain continuous compliance with Sections (i)–(iii) of the 4.13(a)(3) CPO Exemption.[13]
3. The SPV operator must file a CFTC Regulation 4.13(b) exemption notice with the National Futures Association for each SPV.
4. The SPV may hold only the CDS needed to effectuate the CRT transaction. There must be no active trading, no discretionary management, and disclosures must state that the SPV operator is not registered as a CPO and is relying on this no-action relief.
5. Proceeds from the issuance must be held in cash or “highly liquid”[14] assets. Payment obligations of the SPV must be secured by collateral, and security agreements must provide that any obligations to the sponsoring bank will be repaid prior to any repayments of principal or interest to the holders of the notes issued by the SPV.
6. The SPV must maintain bankruptcy-remote protections, as set forth by the Staff.[15]  

Key Takeaways

This no-action position provides clarity for entities utilizing CRT structures to mitigate balance sheet risk and to obtain capital relief. More broadly, the Staff’s response suggests that the presence of a single swap used for the limited purpose of transferring credit risk does not, alone, transform an SPV into a commodity pool.

Asset managers may also leverage this no-action position in developing new products and potentially in reassessing regulatory approaches and disclosures for existing products, particularly where prior structuring or disclosure was driven by CPO registration concerns, provided that any such changes are accompanied by appropriate investor notification.

[1] CFTC Staff Letter No. 25-50 (Dec. 19, 2025).

[2] 17 C.F.R. § 4.7(a)(6).

[3] CFTC Request Letter (Dec. 17, 2025).

[4] 77 Fed. Reg. 11252 (Feb. 24, 2012).

[5] 17 C.F.R. § 230.506(c).

[6] QEPs generally include highly sophisticated institutional and professional investors, such as registered broker-dealers, swap dealers, futures commission merchants, CPOs and CTAs, investment advisers registered under the Advisers Act, and “qualified purchasers” under the Investment Company Act of 1940 (ICA). QEPs also include certain knowledgeable employees and affiliates, non-U.S. persons, and entities (including trusts and charitable organizations) established, owned, and managed exclusively by QEPs. In addition, investment companies or business development companies registered under the ICA, certain banks, insurance companies, pension plans, governmental entities, corporations, and natural persons qualifying as accredited investors may qualify as QEPs if specified portfolio thresholds are met. See 17 C.F.R. § 4.7(a)(6).

[7] 17 C.F.R. § 4.13(e)(2)(iii) requires that an operator relying on a CPO registration exemption under CFTC Regulation 4.13(a)(3), including the QEP Exemption, provide each existing participant in a pool the right to redeem the participant’s interest in the pool and inform each participant of such right no later than the time the person commences operating such pool.

[8] CFTC Staff Letter No. 25-37 (Nov. 21, 2025).

[9] CFTC Request Letter (Aug. 18, 2025).

[10] To qualify for the 4.13(a)(3) CPO Exemption, the following must be satisfied: (i) interests in the pool are exempt from registration under the Securities Act, and such interests must be offered and sold without marketing to the public in the United States; (ii) the pool at all times meets a de minimis test pursuant to which either (x) the margins, premiums and required minimum security deposit for retail forex transactions does not exceed 5% of the liquidation value of the pool’s assets after giving effect to unrealized profits or losses or (y) the aggregate net notional value of the pool’s commodity positions, determined at the time the most recent position was established, does not exceed 100 percent of the liquidation value of the pool’s portfolio, after taking into account unrealized profits and unrealized losses; (iii) the pool operator reasonably believes at the time of investment that each investor in the pool meets one of certain enumerated tests relating to the financial sophistication of the investor (e.g., accredited investor or qualified eligible purchaser); and (iv) participations in the pool are not marketed as or in a vehicle for trading in the commodity futures or commodity options markets.

[11] 17 C.F.R. § 4.13(a)(3)(iv).

[12] These seven factors are: (1) the name of the fund; (2) whether the fund’s primary investment objective is tied to a commodity index; (3) whether the fund makes use of a controlled foreign corporation for its derivatives trading; (4) whether the fund’s marketing materials, including its prospectus or disclosure statement, refer to the benefits of the use of derivatives in a portfolio or make comparisons to a derivative index; (5) whether, during the course of normal trading activities, the fund or entity on its behalf has a net short speculative exposure to any commodity through a direct or indirect investment in other derivatives; (6) whether the futures/options/swaps transactions engaged in by the fund or on behalf of the fund will directly or indirectly be its primary source of potential gains and losses; and (7) whether the fund is explicitly offering a managed funds strategy. Supra note 2, at 11259.

[13] Supra note 10.

[14] 17 C.F.R. § 1.25(b)(1).

[15] This condition will be satisfied if the following the conditions are met: (a) the SPV’s powers shall be limited to engaging in activities related to the CRT transactions; (b) the SPV shall be restricted from incurring additional debt; (c) the SPV shall be restricted from entering into additional commodity interests transactions; (d) the SPV shall be governed by a board of independent directors; (e) corporate formalities shall be observed between the SPV and the sponsoring bank or CPO, such that each entity maintains its separate corporate status and identity; (f) any agreement imposing obligations on the holders of the notes issued by the SPV, the sponsoring bank, and any other potential creditors of the SPV shall include a waiver of any right to file a bankruptcy or equivalent petition for the SPV; and (g) the SPV shall be required to maintain an independent director, whose vote is required for the filing of a voluntary bankruptcy petition and shall be subject to traditional separateness covenants.