CFTC Proposes to Codify Commodity Pool Operator Registration Relief for SEC-Registered Investment Advisers

On August 18, 2026, the U.S. Commodity Futures Trading Commission (CFTC or the Commission) approved a notice of proposed rulemaking¹ (the Proposal) that would amend part 4 of the CFTC’s regulations to:

• Reinstate the commodity pool operator (CPO) registration exemption under CFTC Rule 4.13(a)(4) (the Proposed RIA-QEP Exemption) for certain investment advisers registered with the Securities and Exchange Commission (SEC) (RIAs), substantively codifying CFTC No-Action Letter 25-50² (Letter 25-50 or the Letter), with important modifications.
• Restore the related exemption from commodity trading advisor (CTA) registration under CFTC Rule 4.14(a)(8) for advisors to pools operated pursuant to CFTC Rule 4.13(a)(4).
• Increase the aggregate gross capital contributions threshold in the CPO registration exemption for small commodity pools under CFTC Rule 4.13(a)(2) (the Small Pool Exemption) from $400,000 to $800,000.

The Proposal would largely track the December 2025 no-action relief granted by the CFTC in Letter 25-50, but with notable modifications — most significantly, (1) a recalibrated eligibility standard for natural-person participants, (2) a modified Form PF reporting standard, and (3) a requirement that CPOs seeking to withdraw from registration in reliance on CFTC Rule 4.13(a)(4) provide participants with notice and an opportunity to redeem. The Commission intends the proposed amendments, if finalized, to supersede the no-action positions in Letter 25-50.

The Proposal was published in the Federal Register on August 21, 2026.

Who Is Affected?

The primary beneficiaries of the Proposal will be SEC-registered private-fund advisers whose client base consists of “qualified eligible persons” (QEPs), and whose commodity interest trading activity exceeds the CFTC Rule 4.13(a)(3) de minimis exemption thresholds or whose investment strategy otherwise makes them ineligible to claim an exemption under CFTC Rule 4.13(a)(3). Until Letter 25-50 was issued by the Market Participants Division (MPD) of the CFTC in December 2025, such investment advisers were required to register with the CFTC as CPOs and become members of the National Futures Association (NFA). The issuance of Letter 25-50 provided relief from these requirements for certain advisers, although the nature of a staff no-action position, as opposed to a formal exemptive rule adopted by the Commission, provided less legal certainty than market participants had desired.

The proposed expansion of the CFTC Rule 4.14(a)(8) registration exemption for CTAs under the Proposal, which was not an aspect of Letter 25-50, will allow more investment advisers — including those that are both CPOs and CTAs to their qualifying commodity pools, as well as those that are CTAs to pools operated by unaffiliated CPOs that themselves claim exemption under CFTC Rule 4.13(a)(4) — to deregister with the CFTC and withdraw from NFA membership.

The Proposal will not benefit investment advisers who operate or advise retail commodity pools. Additionally, the Proposal as drafted would harm certain investment advisers who have natural person QEPs that will not meet the Rule 4.13(a)(4) modified QEP standard discussed below, including employees’ securities companies and certain private funds that are exempt under Section 3(c)(1) of the Investment Company Act of 1940 (the 40 Act).³

Background: Letter 25-50

On December 19, 2025, MPD issued Letter 25-50. Subject to the Letter’s conditions, MPD stated that it would not recommend enforcement action against an RIA that fails to register, or that withdraws its registration, as a CPO for a particular commodity pool if, among other things, the adviser reasonably believes that each participant in the pool is a QEP and files Form PF with the SEC with respect to the pool.

Although it was a staff no-action letter, and not a formal exemptive rule of the Commission, Letter 25-50 substantially restored the CPO registration exemption formerly set forth in CFTC Rule 4.13(a)(4) (the Original QEP Exemption), which the Commission rescinded in 2012. MPD expressly framed the no-action relief under Letter 25-50 as an interim measure pending Commission rulemaking to reinstate the Original QEP Exemption.

For more information on Letter 25-50 and related CFTC No-Action Letter 26-06,⁴ see Sidley’s Client Updates here and here.

The Proposal

The Proposal is the formal Commission rulemaking contemplated by Letter 25-50. It would create a CPO registration exemption under CFTC Rule 4.13(a)(4) that could be claimed for each “Eligible Pool” if:

1. the person claiming the exemption is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
2. the pool interests are exempt from registration under the Securities Act of 1933 and are offered and sold without marketing to the public in the United States, except that the public-marketing restriction would not apply to a pool also offered under SEC Rule 506(c);
3. the person reasonably believes, at the time of investment, or, for an existing pool, when the pool converts to exempt status, that each participant is an “Eligible Participant,” as described below; and
4. the person files Form PF for the pool, if applicable regulations require that filing.

The Commission notes that the Proposed RIA-QEP Exemption, like the Letter 25-50 exemption, can be claimed on a pool-by-pool basis. The Proposal also notes that the Original QEP Exemption permitted a CPO to claim the Original QEP Exemption for some pools and the Rule 4.13(a)(3) de minimis exemption for others but is silent concerning pools operated under CFTC No-Action Letter 12-38 (the de minimis fund-of-funds letter)⁵ or other relief.

New Eligibility Standard for Natural Persons

The Proposal’s most significant departure from Letter 25-50 concerns who may invest in an exempt pool (Eligible Participants). Letter 25-50 requires the CPO to reasonably believe that every participant is a QEP under CFTC Rule 4.7(a)(6), without distinguishing natural persons from entities. The Proposal instead would restore a two-tier participant standard that was a feature of the Original QEP Exemption:

• Natural persons would be limited to QEP categories listed in Rule 4.7(a)(6)(i) — that is, natural persons who qualify as QEPs without being required to satisfy the “Portfolio Requirement” under Rule 4.7(a)(5). These categories include, among others, qualified purchasers under the 40 Act, knowledgeable employees, qualifying principals of certain CFTC- and SEC-registered intermediaries, certain persons connected with the exempt pool, and non-U.S. persons. QEPs who would otherwise qualify under Rule 4.7(a)(6)(ii) would not be Eligible Participants under the Proposal.
• Non-natural persons would include any QEP under Rule 4.7(a)(6), including entities that qualify by satisfying the Portfolio Requirement, and “accredited investors” under SEC Rule 501(a)(1)-(3), (a)(7), and (a)(8).⁶

The Proposal would therefore narrow the range of natural persons who may invest in a Rule 4.13(a)(4) pool, as compared with pools relying on Rule 4.13(a)(3), Letter 25-50, Letter 12-38, or Rule 4.7. A natural person who is a QEP solely because the person is an accredited investor who satisfies the Portfolio Requirement — currently, at least $4 million in qualifying securities and other investments; or at least $400,000 in qualifying initial margin, option premiums, and minimum security deposits during the prescribed six-month lookback; or a permitted combination — would not be an Eligible Participant for the Proposed RIA-QEP Exemption.

The Proposal does not address natural persons who qualify as QEPs under Letter 25-50 solely by being accredited investors and satisfying the Portfolio Requirement but who would not be Eligible Participants under Rule 4.13(a)(4). That gap matters because, if the Proposed RIA-QEP Exemption entirely supersedes Letter 25-50, pools currently operating under the Letter would need to be converted to Rule 4.13(a)(4) pools, and natural persons who were eligible to invest in such pools as Letter 25-50 pools would no longer be eligible to invest in the same pools as Rule 4.13(a)(4) pools.

The Commission specifically asks whether the Eligible Participant definition should include additional categories of accredited investors. Managers operating funds that permit such investors, including employees’ securities companies and certain 3(c)(1) private funds, should assess this potential eligibility gap and may wish to raise it in comment letters to the Commission.

Form PF Reporting

Letter 25-50 requires an RIA to file Form PF with the SEC for each pool for which the RIA claims a Letter 25-50 exemption. Under the Proposal, Form PF filing would be a condition of the Proposed RIA-QEP Exemption only if the RIA is otherwise required to file Form PF. That distinction could matter quite a bit if the pending joint SEC-CFTC proposal to raise Form PF filing thresholds⁷ is adopted, because some RIAs falling below the new Form PF thresholds would not be able to rely on Letter 25-50 as a result but would be able to rely on the Proposed RIA-QEP Exemption if adopted in the form proposed.

The Commission asks whether the proposed Form PF condition would provide sufficient information for market and systemic-risk oversight, particularly because some Eligible Pools could be subject to neither Form PF nor Form CPO-PQR reporting, and whether additional or alternative reporting conditions should apply.

For more information on the joint SEC-CFTC proposal to raise Form PF filing thresholds, see Sidley’s Client Update.

Redemption Rights

Notably, under the Proposal, a CPO that withdraws its registration in reliance on Rule 4.13(a)(4) would be required to provide investors with notice and an opportunity to redeem. This is in contrast to Letter 25-50, which does not impose those requirements on a CPO withdrawing its registration in reliance on the Letter. This could be a serious concern for CPOs seeking to deregister in reliance on the Proposed RIA-QEP Exemption, particularly firms operating pools that do not offer regular liquidity. Market participants should consider commenting on this aspect of the Proposal if it is a concern for them.

Claiming the Exemption and Ongoing Obligations

A claim under the Proposed RIA-QEP Exemption would be filed electronically through NFA’s Exemptions System in the same manner as a CFTC Rule 4.13(a)(3) exemption. This would replace the manual filing process under Letter 25-50, which has proven complex and time consuming for NFA.

A person claiming the exemption also would be subject to the generally applicable provisions of Rules 4.13(b) and 4.13(c), including the following:

• Statutory disqualification. The exemption notice would have to represent that neither the person claiming the exemption nor any of its principals has a statutory disqualification that would require disclosure under Section 8a(2) of the Commodity Exchange Act, subject to Rule 4.13(b)(1)(iii)’s exception for a matter previously disclosed in an application for CFTC registration that resulted in the approval of such registration.
• Annual affirmation. Within 60 days after each calendar year-end, the claimant would have to affirm the exemption through NFA’s Exemptions System, withdraw the exemption because exempt activities have ceased, or withdraw the exemption and apply for registration.
• Updating obligations. If information or representations in the notice become inaccurate or incomplete, the claimant would have to amend the notice through NFA’s Exemptions System within 15 business days after becoming aware of the change.
• Recordkeeping. The claimant would have to retain books and records prepared in connection with its pool operator activities for five years, keep them readily accessible for the first two years, make them available for regulatory inspection, and respond to Commission special calls.

Related CTA Registration Exemption

The Proposal would also amend CFTC Rule 4.14(a)(8)(i)(D) to restore the pre-2012 cross-reference to Rule 4.13(a)(4), once again making Rule 4.13(a)(4) pools permissible clients for CTAs relying on the Rule 4.14(a)(8) exemption. A qualifying investment adviser, including an RIA, therefore could rely on the CTA registration exemption for Rule 4.13(a)(4) pools, provided that its commodity interest trading advice is directed solely to permitted clients. The adviser would remain subject to the Rule 4.14(a)(8) exemption’s other conditions, including the incidental-advice and no-holding-out conditions, as well as the NFA notice, annual affirmation, updating, and recordkeeping requirements.

Treatment of Pools Already Operating Under Letter 25-50

The Commission proposes that Rule 4.13(a)(4) supersede Letter 25-50 and notes that MPD may then rescind Letter 25-50. If a final rule supersedes Letter 25-50 relief, a CPO now relying on Letter 25-50 who wishes to continue operating without registering with the CFTC would need to claim the final Rule 4.13(a)(4) exemption or another available basis for relief.

Two points bear emphasis:

• The Commission states that it does not intend to apply CFTC Rule 4.13(e)(2), including its redemption-right requirement, when a pool covered by Letter 25-50 transitions to the final Rule 4.13(a)(4) exemption.
• To implement that intent, the Commission is considering a later effective date solely for the Rule 4.13(e)(2) conforming amendment, particularly as applied to pools already covered by Letter 25-50. The Proposal otherwise contemplates that the amendments would become effective upon publication of a final rule. The Commission requests comment on this approach.

Because the Proposed RIA-QEP Exemption differs from Letter 25-50 in several respects, most importantly with respect to the natural-person eligibility standard, managers relying on Letter 25-50 should assess whether each pool and all of its participants would qualify under the Proposed RIA-QEP Exemption.

Letter 25-50 remains available according to its terms until the Commission promulgates final rules addressing reinstatement of the Original QEP Exemption or publicly determines not to promulgate such rules. Firms considering deregistration, launching new pools or relying on alternative exemptions for existing pools, or submitting comments should carefully compare Letter 25-50 and the Proposal, particularly their respective investor-eligibility standards, notice and redemption requirements, and Form PF filing requirements, before deciding how to proceed. The treatment of a future transition to the Proposed RIA-QEP Exemption also may affect the conversion strategy for some firms. In particular, the Commission has stated that it does not intend the notice and redemption requirements of Rule 4.13(e)(2) to apply to a pool that relies on a Letter 25-50 exemption and transitions to a Rule 4.13(a)(4) exemption, whereas a pool transitioning from a Rule 4.7 compliance exemption may be subject to those requirements.

Alternative Exemptions

If the Proposed RIA-QEP Exemption is adopted in the form currently proposed, CFTC Rule 4.13(a)(3) would continue to be available as an alternative exemption from CPO registration where commodity interest trading is de minimis and the investment adviser does not wish to be subject to the stricter natural person QEP participant standards proposed for Rule 4.13(a)(4) pools. The standards for participating in a Rule 4.13(a)(3) pool are lower than those proposed for Rule 4.13(a)(4) pools—participants need only be accredited investors (with no Portfolio Requirement) or QEPs (with no bifurcation between entity and natural person QEPs) to invest in a Rule 4.13(a)(3) pool.

Expansion of the Small Pool Exemption

Separately, the Proposal would increase the aggregate gross capital contribution limit for the Small Pool Exemption under Rule 4.13(a)(2) from $400,000 to $800,000 to reflect inflation. The threshold would continue to apply across all pools a person operates or intends to operate. The 15-participant-per-pool limitation and the existing exclusions from the contribution calculation would remain unchanged.

Request for Comment; Next Steps

Among other matters, the Commission requests comment on whether:

• the Proposed RIA-QEP Exemption and its conditions are appropriate.
• the Rule 506(c) marketing accommodation appropriately reflects securities-law developments since the JOBS Act.
• the Form PF condition is adequate for market and systemic-risk oversight in light of the proposed higher Form PF thresholds.
• additional accredited-investor categories should qualify as Eligible Participants.
• a final rule should supersede Letter 25-50 in whole or in part, and whether relief of the type provided in CFTC Letter 26-06 (which reissued Letter 25-50 to address CPO delegation arrangements) remains necessary.
• the conforming amendments, including a potential delayed effective date for Rule 4.13(e)(2), are clear and appropriate.
• $800,000 is the appropriate threshold for the Small Pool Exemption.

Comments are due October 5, 2026.

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Sidley regularly advises clients on CPO registration, CTA registration, and CFTC regulatory requirements. Our team is available to assess the implications for your business, assist with comment letters, and advise on the application of CPO and CTA exemptions to specific business structures.

Leda Morochina contributed to this Sidley Update.

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¹Commodity Pool Operators and Commodity Trading Advisors: Reduction of Duplicative Regulation Through Intermediary Registration Exemptions; Expansion of the Exemption for Small Commodity Pools, 91 Fed. Reg. 54,264 (proposed Aug. 21, 2026) (to be codified at 17 C.F.R. pt. 4), https://www.federalregister.gov/d/2026-17079.

² CFTC No-Action Letter No. 25-50, Dec. 19, 2025, https://www.cftc.gov/csl/25-50/download, as reissued to address CPO delegation arrangements by CFTC No-Action Letter No. 26-06, Feb. 26, 2026, https://www.cftc.gov/csl/26-06/download.