MFA Seeks Extension of CFTC Relief From Position Limits Aggregation Rule

June 14, 2019

From: MFA, SIFMA AMG, FIA

To:

Commodity Futures Trading Commission

On June 14, MFA, FIA and SIFMA AMG submitted a letter to the CFTC requesting that it extend the no-action relief it provided with respect to the aggregation of position limits, No-Action Letter 17-37.  As you may recall, MFA and SIFMA AMG sought relief on behalf of the industry in 2017 for position limits aggregation relief relating to the owned entity exemption.  FIA submitted a separate letter supporting the request and seeking further clarifications.  The CFTC issued position limits aggregation relief, which expires on August 12, 2019.

The CFTC staff granted relief with respect to the position limits aggregation rule where the person:

(1) otherwise would be in compliance with the applicable position limits in Commission Regulation 150.2 and position aggregation requirements under Commission Regulation 150.4(b) but for the fact that the person does not submit a notice pursuant to Commission Regulation 150.4(c)(6) that it is relying on an exemption from position aggregation requirements, unless the person fails to file such a notice within five business days after receiving a request from the Commission, Commission staff, a DCM, or DCM staff (“Commission or a DCM”), to file such a notice;

(2) otherwise would be in compliance with the applicable position limits in Commission Regulation 150.2 and position aggregation requirements under Commission Regulation 150.4(b) and Commission Regulation 150.4(c) but for the fact that in its notice filing, the person addresses the circumstances warranting disaggregation only for the particular account or position identified by the Commission or a DCM in the request;

(3) otherwise would be in compliance with the applicable position limits in Commission Regulation 150.2 and position aggregation requirements under Commission Regulation 150.4(b)(2) but for the fact that the person complies with 150.4(b)(2)(i)(A) only in connection with derivatives trading;

(4) otherwise would be in compliance with the applicable position limits in Commission Regulation 150.2 and position aggregation requirements under Commission Regulation 150.4(b)(2) and Commission Regulation 150.4(c) but for the fact that in its notice filing seeking an owned entity aggregation exemption under Commission Regulation 150.4(b)(2), the person’s certification: (a) in regards to controlling the owned entity or having routine access to relevant information about the owned entity addresses only derivatives trading; (b) provides that it does not control derivatives trading of the owned entity nor have routine access to derivatives trading information about the owned entity with no mention of whether it is able to do so; or (c) only addresses the owner, and not the owned entity, in circumstances where the owner is not aware, and should not be aware, of the derivatives trading activity of the owned entity;

(5) otherwise would be in compliance with the independent account controller exemption in Commission Regulation 150.4(b)(4) but for the fact that the person is not eligible to rely on that exemption because either: (a) the person or the person’s independent account controller does not meet the definition of an “eligible entity” or an “independent account controller” because it is a CTA that is not registered as such by virtue of meeting the criteria for an exemption from registration; or (b) the person has authorized an independent account controller to act in a fiduciary capacity by independently controlling the trading in the person’s positions and accounts, but the person does not fall within the categories of “eligible entity” set out in Commission Regulation 150.1(d); or

(6) does not aggregate its positions with those of another person pursuant to the “substantially identical trading strategies” requirement in Commission Regulation 150.4(a)(2), unless that person holds or controls the trading of positions in more than one account or pool with substantially identical trading strategies in order to willfully circumvent applicable position limits.

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