U.S. Commodity Futures Trading Commission Restores Longstanding Registration Relief for SEC-Registered Commodity Pool Operators

On December 19, 2025, the Market Participants Division (MPD) of the U.S. Commodity Futures Trading Commission (CFTC) published Letter 25-50, stating that it will not recommend enforcement action against an investment adviser registered with the Securities and Exchange Commission (SEC) that operates one or more commodity pools offered and sold exclusively to “qualified eligible persons” (QEPs) if such investment adviser does not register, or withdraws its registration, as a commodity pool operator (CPO) or commodity trading advisor (CTA).

Letter 25-50 essentially restores an exemption from registration formerly set forth in CFTC Rule 4.13(a)(4) (the QEP Exemption) that was repealed in 2012. The repeal of the QEP Exemption led to a large number of institutional investment advisers being required to register with the CFTC as CPOs and become members of the National Futures Association (NFA). As indicated in Letter 25-50, the CFTC is expected to soon seek to restore the QEP Exemption through a formal rulemaking process, although the timing of that rulemaking process is unknown, particularly in light of the recent confirmation of a new Chairman CFTC. 

As detailed below, firms that are currently registered as CPOs and are NFA members, and firms that are contemplating such registration and membership, will now be able to rely on Letter 25-50, on a pool-by-pool basis, in lieu of registering as CPOs and becoming NFA members. This new CPO registration relief also has the effect of expanding the CTA registration relief available under CFTC Rule 4.14(a)(5) to firms that act as CTAs solely to pools for which they are exempt from CPO registration. 

The no-action position was issued in response to a request from the Managed Funds Association (MFA), a trade association representing the global alternative asset management industry.

The No-Action Relief

Pending the CFTC’s consideration of whether to reinstate the QEP Exemption through formal rulemaking, and until such time as the CFTC promulgates rules addressing that reinstatement — or publicly determines not to promulgate rules — MPD has stated it will not recommend the CFTC commence enforcement action against any CPO or CTA that (1) is registered with the SEC as an investment adviser, (2) offers commodity pool interests solely pursuant to a nonpublic offering under the Securities Act of 1933 (the Securities Act), and (3) offers commodity pool interests solely to sophisticated, often institutional, investors that meet the definition of “qualified eligible person” under CFTC Rule 4.7(a)(6) (any such CPO or CTA, a QEP Manager).

Requirements to Rely on the Relief

Letter 25-50 provides CPO registration relief, on a pool-by-pool basis, under the following conditions:

1. The CPO must be registered with the SEC as an investment adviser;
2. Interests in the commodity pool operated by the CPO pursuant to Letter 25-50 must be exempt from registration under the Securities Act;
3. The CPO must reasonably believe, at the time of investment, or at the time the CPO begins to rely on Letter 25-50 with respect to the pool, that each pool participant is a QEP;
4. The CPO must file Form PF with the SEC with respect to the pool for which the CPO is claiming registration relief;
5. The CPO must represent that neither the CPO, nor any of its principals, has in its background any statutory disqualification under the Commodity Exchange Act;
6. The CPO must make and keep all books and records prepared in connection with its activities as a CPO for five years from when the records are prepared and must keep the records open for regulatory inspection;
7. The CPO must file a claim under Letter 25-50 via email at mpdnoaction@cftc.gov; and
8. The CPO must reaffirm its eligibility for the relief on an annual basis.

Who May Rely on This Relief

The primary beneficiaries of relief under Letter 25-50 are CPOs that (1) are registered with the SEC and that operate or intend to operate one or more commodity pools for which they are registered or will be registered as CPOs, (2) have claimed or intend to claim CPO compliance exemptions under CFTC Rule 4.7, and (3) are also “private funds” reported to the SEC on such firm’s Form PF. 

In addition, a CPO that is also acting as CTA to a pool for which it may now rely on Letter 25-50 may also be able to rely on a CTA registration exemption under CFTC Rule 4.14(a)(5), which exempts a CTA from registration if the CTA is also an exempt CPO and directs its commodity trading advice solely to pools for which it is also the exempt CPO. This exemption is not available if the firm also acts as CTA to one or more separately managed account clients.

Investor Right to Redeem

In addition to granting the no-action relief, the CFTC confirms that a CPO that is deregistering solely because of Letter 25-50 is not required to first offer a redemption right to pool participants pursuant to CFTC Rule 4.13(e). This will greatly simplify the process of deregistering as a CPO, as a number of pools for which firms may seek to rely on Letter 25-50 lack the liquidity necessary to feasibly offer such a redemption right.

Limitations of the Relief

While far-reaching, the relief provided by the CFTC is applicable only to certain types of investment advisers.
Advisers who (i) are not themselves registered as investment advisers with the SEC (e.g. are exempt reporting advisers or are registered only under state law) or (ii) are or intend to be SEC-registered investment advisers but do not or will not otherwise report all of their commodity pools on Form PF — as is the case with pure commodity pools and certain other types of pooled investment vehicles — will not be able to rely on this relief with respect to those pools.

Comparison to the De Minimis Exemption

While the de minimis CPO registration exemption under CFTC Rule 4.13(a)(3) contains strict limits on derivatives usage by a pool and therefore limits use of the exemption to CPOs that focus their investments on securities and other asset classes and otherwise engage in limited commodity interest trading activity, Letter 25-50 will allow advisers that operate pooled investment vehicles available exclusively to sophisticated investors, primarily institutional investors, family offices, and high-net-worth individuals—who possess the knowledge, resources, and expertise not available to retail investors—to engage freely in commodity interest trading with no limitations while avoiding the regulatory burden of CFTC registration and NFA membership and oversight. 

While the primary beneficiaries of Letter 25-50 are CPOs that will no longer be required to register as such and become members of NFA, CPOs that currently operate certain de minimis commodity pools pursuant to CFTC Rule 4.13(a)(3) may also consider switching their exemptions to Letter 25-50 in order to eliminate the limitation on derivatives usage under that rule. 

Restoration of the QEP Exemption

Letter 25-50 indicates that the CFTC intends to reestablish the QEP Exemption through official regulatory rulemaking channels, opening the possibility of permanent regulatory relief that will provide a greater degree of comfort than reliance on a no-action position. If this effort advances, the formal rulemaking process would allow the industry to provide further input on the proposal.

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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 and assist with the deregistration process.