CFTC Repeals 4.13(a)(4) Exemption Used By Many Private Fund Managers

On February 9, 2012, the U.S. Commodity Futures Trading Commission (CFTC) rescinded CFTC Rule 4.13(a)(4), which is the exemption from CFTC registration as a Commodity Pool Operator (CPO) that is commonly used by general partners, managers and sponsors of private funds that trade futures. A private fund currently operating under Rule 4.13(a)(4) can continue to do so until December 31, 2012. As of December 31, 2012, a private fund previously relying on Rule 4.13(a)(4) must qualify for an alternate exemption, such as the exemption under Rule 4.13(a)(3), often called the "de minimis" exemption, or else the "operator" of the fund must register with the CFTC as a CPO. The CFTC also adopted other changes to its rules governing CPOs and Commodity Trading Advisors (CTAs) as discussed below.