July 17, 2017
Mr. Amir Zaidi, Director
Division of Market Oversight
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, N.W.
Washington, D.C. 20581
Re: Request under Regulation 140.99 for No-Action Relief Relating to Position Aggregation Requirements under Commission Regulation 150.4
Dear Mr. Zaidi,
The Asset Management Group of the Securities Industry and Financial Markets Association (“SIFMA AMG” or “AMG”)1 and the Managed Funds Association (“MFA”)2 write to request no action relief relating to position aggregation requirements in Regulation 150.4 promulgated by the Commodity Futures Trading Commission (the “Commission” or “CFTC”). The requested relief would enable asset managers, investment funds, clients and other persons to apply the Commission’s final rulemaking regarding position aggregation requirements (the “Final Rule”)3 while mitigating some of the unduly burdensome obligations and severe operational challenges associated with those requirements. Specifically, pursuant to Commission Regulation 140.99, AMG and MFA request that the Commission’s Division of Market Oversight (the “Division”) provide no-action relief confirming that the Division will not recommend enforcement action against any person 4 for violating any position aggregation requirement in Commission Regulation 150.4, or any applicable position limit, where that person:
(1) otherwise would be in compliance with applicable position limits and position aggregation requirements 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 notice within five (5) business days after receiving a request from the Commission (or, for a contract that is subject to Commissionimposed position limits, a request from an Exchange) to file such a notice; 5
(2) otherwise would be in compliance with the independent account controller exemption (“IAC exemption”) from aggregation but for the fact that the person is not eligible to rely on that exemption because:
(a) the person or its independent account controller is an exempt commodity trading advisor (“CTA”); 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.(d); or
(3) does not aggregate its positions with those of another person pursuant to the “substantially identical trading strategies” requirement of Commission Regulation 150.4(a)(2) (the “SITS Rule”), 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.
AMG and MFA also agree with and join in the Futures Industry Association’s (“FIA”) request for relief dated July 12, 2017, with respect to the form and timing of notice filings with respect to the owned-entity aggregation exemption, discussed further below.
1 SIFMA AMG brings the asset management community together to provide views on policy matters and to create industry best practices. SIFMA AMG’s members represent U.S. and multinational asset management firms whose combined global assets under management exceed $39 trillion. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds.
2 MFA represents the global alternative investment industry and its investors by advocating for sound industry practices and public policies that foster efficient, transparent, and fair capital markets. MFA, based in Washington, DC, is an advocacy, education, and communications organization established to enable hedge funds and managed futures firms in the alternative investment industry to participate in public policy discourse, share best practices and learn from peers, and communicate the industry’s contributions to the global economy. MFA members help pension plans, university endowments, charitable organizations, qualified individuals and other institutional investors to diversify their investments, manage risk, and generate attractive returns. MFA has cultivated a global membership and actively engages with regulators and policy makers in Asia, Europe, North and South America, and many other regions where MFA members are market participants.
3 See Aggregation of Positions, 81 Fed. Reg. 91454 (Dec. 16, 2016).
4 The term “person” as used herein has the meaning set forth in Commission Regulation 1.3(u), 17 C.F.R. § 1.3(u), and includes, among others, individuals, partnerships, and corporations.
5 References herein to requests by the “Commission” or an “Exchange” with respect to disaggregation notice filings include requests by Commission or Exchange staff.