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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January 19, 2012
Topics: Gary Gensler Mary Schapiro, Commodity Futures Trading Commssion, CFTC, Securities and Exchange Commission, SEC, Definition of "Eligible Contract Participant", Global Foreign Exchange Division, GFXD, eligible contract participant, ECP, commodity pool, assets under management, U.S. institutional foreign exchange markets, Bank for International Settlements, non-bank financial insitutions, market liquidity, investment funds, systemic risk, close-out netting, institutional derivatives products, trading advisor, algorithms, retail foreign exchange market, commodity pool operator, investment advisers, registered investment companies, bucket shops, James Kemp, Stuart Kaswell, Jade Investment Group LLC, Jacob Juma Omukwe, Nicholas Trimble, Capstone FX Quantitative Analysis Inc., Beekeepers Fund Capital Management LLC, NASA, Cyber Market Group LLC, Patrick Rakotonanahary, FCM, First Capital Savings and Loan, Jeffery Alan Lowrance, Department of Justice, Queen Shoals LLC, Charlotte M. Hanson, Sidney Stanton Hanson, Barki LLC, Forest Glen, ponzi scheme, Alpha Trade Group, S.A., short-term REIT, long-term REIT, Gary Martin, Brenda Martin, Highland Stone Capital Management LLC, Forex Capital Trading Group Inc, CTA, forex, pooled investment fund, retirement fund,
To:
Gary Gensler (CFTC), Mary Schapiro, (SEC)Jill Sommers (CFTC), Bart Chilton (CFTC), Scott D. O'Malia (CFTC), Mark Wetjen (CFTC), David Stawick (CFTC), Daniel Berkovitz, Richard Shilts, Ananda Radhakrishnan, Elisse B. Walter (SEC), Luis Aguilar (SEC), Troy Paredes (SEC), Daniel M. Gallagher (SEC), Elizabeth Murphy (SEC), Robert Cook, David Blass