On January 19, MFA, SIFMA, and GFXD submitted a joint letter to the CFTC with a proposed safe harbor from its proposed eligible contract participant (ECP) definition. The proposed safe harbor makes it clear that notwithstanding any other language in the Commodity Exchange Act (CEA), a commodity pool shall be an eligible contract participant if the commodity pool: (1) has total assets exceeding $10,000,000; and (2) is not formed for the purpose of evading regulation under Sections 2(c)(2)(B) and 2(c)(2)(C) of the CEA. Due to the CFTCs proposed look-through where all direct and indirect participants of a commodity pool must be ECPs in order for the pool to be an ECP, in the absence of such a safe harbor, a significant number of investment funds will not qualify as ECPs and will have to exit the U.S. institutional foreign exchange markets.
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