The Commodity Futures Trading Commission ("CFTC") Division of Market Oversight ("DMO") has issued relief (see CFTC Letter 21-21) extending the no-action positions previously granted with respect to certain position aggregation requirements under CFTC Regulation 150.4. Unlike previous extensions, the relief will remain in effect until the later of the effective or compliance date of a future rulemaking addressing the relevant aggregation and notice filing obligations.
Background
The CFTC’s position aggregation rule, adopted in December 2016 and effective February 2017, sets forth requirements for aggregating positions across accounts for purposes of federal position limits and provides a process for seeking exemptions from such aggregation (see our Alert for a discussion of this rule). Since the rule’s adoption, DMO has issued a series of no-action letters (CFTC Letters 17-06, 17-37, 19-19, and 22-09) providing relief from certain notice filing and aggregation requirements, in response to industry concerns regarding the commercial practicality of compliance and the need for further regulatory clarity.
Summary of No-Action Relief
The no-action positions, as extended, provide that DMO will not recommend enforcement action against market participants who:
- Would otherwise comply with position limits and aggregation requirements but do not submit a notice of exemption unless requested by the Commission or an exchange, and then only within five business days of such request;
- Limit the scope of their notice filings to the specific accounts or positions identified in a request from the Commission or exchange;
- Address certain certification requirements for owned entity aggregation exemptions only in connection with derivatives trading;
- Rely on the independent account controller exemption even if the entity or controller is not registered, provided certain conditions are met;
- Do not aggregate positions under the “substantially identical trading strategies” requirement unless there is willful circumvention of position limits.
The relief is intended to provide commercially practical exemptions while preserving the Commission’s ability to monitor compliance and conduct market surveillance.
Extension and Future Rulemaking
DMO has determined that a further extension of the no-action positions is warranted in light of ongoing industry reliance and the pending need for codification through rulemaking. The relief will remain in effect until the later of the effective or compliance date of a Commission-approved rulemaking addressing the relevant aggregation and notice filing obligations.
