CFTC Staff Partially Reinstate CPO Exemption for RIAs
On December 19, 2025, the staff of the Division of Market Participants of the Commodity Futures Trading Commission (“CFTC”) issued no-action relief from commodity pool operator (“CPO”) registration for SEC-registered investment advisers (“RIAs”) to certain private funds. This relief effectively reinstates the registration exemption previously provided by Rule 4.13(a)(4) for managers to private funds offered solely to qualified eligible persons (“QEPs”), although subject to certain additional conditions.
In this Legal Update, we provide background on CFTC staff’s no-action relief (“NAL 25-50”) and key takeaways. NAL 25-50 is effective immediately, though the exemption under Rule 4.13(a)(3) remains available to CPOs that qualify. Generally, it appears NAL 25-50 will be impactful to RIAs to hedge funds and other private funds that had to register as CPOs because their investment activity did not fall under the de minimis limits of CFTC Rule 4.13(a)(3).
Background
Under the Commodity Exchange Act, among other things, a CPO must register with the CFTC absent availability of an exemption.1 A CPO is a person who is engaged in a business that is of the nature of a commodity pool, investment trust, syndicate, or similar form of enterprise, and who—in connection with that business—solicits, accepts, or receives from others, funds, securities, or property for the purpose of trading in commodity interests.2
From 2003 to 2012, CFTC Rule 4.13(a)(4) exempted operators of funds that were offered solely to QEPs from the CPO registration requirement.3 QEPs are defined as classes of highly sophisticated individual and institutional investors.4 Rule 4.13(a)(4) was repealed in 2012 as part of the implementation of the Dodd-Frank Act, and to provide the CFTC with additional information on the risks presented by commodity pools.5
The impact from the repeal of Rule 4.13(a)(4) was exacerbated by the provision of the Dodd-Frank Act that amended the definition of a commodity interest to include swaps.6 In implementing that amendment, the CFTC said that executing a single swap contract may make a vehicle a commodity pool, and thereby transform its operator into a CPO.7 The CFTC staff has granted exemptions from CPO status on a case-by-case basis through interpretative letters and exemptive and no-action relief, but none were available to the majority of private fund managers.
Implications of NAL 25-50
Private funds (i.e., pooled investment vehicles that are excluded from the definition of investment company by Section 3(c)(1) or 3(c)(7) of the Investment Company Act (“ICA”)) may execute derivatives as part of broad investment strategies, either as a way to gain exposure or as a way to hedge risk.
Since the repeal of Rule 4.13(a)(4), managers to private funds making such investments (or their affiliated general partner entities) have generally been required to register as CPOs or qualify for another exemption from registration. While Rule 4.13(a)(3) provides a registration exemption for managers of funds that invest in a de minimis amount of derivatives, it requires ongoing monitoring to ensure the derivatives position remains below certain thresholds.8 Additionally, managers relying on the Rule 4.13(a)(3) exemption may not market interests in the funds as a vehicle for trading in the commodity futures or commodity options markets.
The CFTC staff recognized in NAL 25-50 that the market has changed since 2012, and the burden of CPO registration for certain private fund managers is no longer warranted. Therefore, NAL 25-50 exempts some private fund managers from the CPO registration requirement while the CFTC considers whether to formally reinstate the Rule 4.13(a)(4) exemption.
To qualify for the CPO registration relief in NAL 25-50, a private fund manager must satisfy the following criteria:
- They must be required to register as a CPO or eligible for another exemption from CPO registration, such as Rule 4.13(a)(3).
- They must be an RIA that files a Form PF with the SEC with respect to each fund covered by NAL 25-50.9
- The fund(s) in question must be exempt from registration under the Securities Act and sold without marketing to the public in the United States (unless offered pursuant to Rule 506(c) of SEC Regulation D).
- The manager must reasonably believe that each investor in the fund is a QEP.
- The manager must satisfy the initial and annual notice filing requirements of CFTC Rule 4.13(b) by emailing the CFTC staff.10
A manager that relies on NAL 25-50 to de-register as a CPO is not required to provide investors with a right to redeem their investment at the time of de-registration. Additionally, a manager that relies on NAL 25-50 to avoid registration as a CPO is also relieved of any obligation to register with the CFTC as a commodity trading advisor with respect to the pools subject to NAL 25-50.
Takeaways
The issuance of NAL 25-50 is a welcome relief for many managers to private funds that have had to register as CPOs or closely track derivatives positions under the Rule 4.13(a)(3) exemption. More broadly, it is evidence that the CFTC’s initiatives to reduce regulatory burdens are being diligently implemented by agency staff.
Notably, (i) NAL 25-50 is only available to RIAs and, accordingly, not to exempt reporting advisers such as certain venture capital fund advisers or other advisers exempt from registration with the SEC, and (ii) in general, this relief will only be available with respect to funds relying on Section 3(c)(1) or 3(c)(7) under the ICA, and not to pooled investment vehicles otherwise exempt from ICA registration. Further, the annual notice requirements under NAL 25-50 and Rule 4.13(a)(3) will continue to be a compliance obligation for those market participants continuing to rely on either exemption. If you have questions about the scope and conditions in NAL 25-50, please reach out to your usual Mayer Brown contact or any of the authors listed below.
1 7 U.S.C. § 6m(1). A CPO is subject to registration and reporting requirements. Categorization as a CPO also is significant because it may subject the entity to certain clearing and margin requirements.
2 7 U.S.C. § 1a(11); 17 C.F.R. § 1.3. A commodity pool is any enterprise for the purpose of trading in commodity interests. 7 U.S.C. § 1a(10)(A); 17 C.F.R. § 1.3.
3 68 Fed. Reg. 47,221 (Aug. 8, 2003).
5 77 Fed. Reg. 11,252 (Feb. 24, 2012).
6 See Dodd-Frank Act § 721, 124 Stat. at 1658-72 (codified at 7 U.S.C. § 1a).
7 77 Fed. Reg. 11,252, 11,258 (Feb. 24, 2012).
9 As a result, this means that, in general, this relief will only be available with respect to funds relying on Section 3(c)(1) or 3(c)(7) under the ICA.
10 Notices under NAL 25-50 must be filed directly with CFTC staff, instead of with the National Futures Association, which generally receives exemption notice filings under Rule 4.13.
