U.S. Commodity Futures Trading Commission Clears Path for Commodity Pool Operators to Rely on Letter 25-50

On February 26, 2026, the Market Participants Division (MPD) of the U.S. Commodity Futures Trading Commission (CFTC) issued No-Action Letter No. 26-06, which clarifies that commodity pool operators (CPOs) may deregister with respect to an existing pool, or determine not to register with respect to a new pool, pursuant to the recently issued No-Action Letter 25-50 (Letter 25-50) without disrupting longstanding CPO delegation arrangements. This relief addresses some of the unintended consequences that were created by the interoperability of Letter 25-50, issued in late December, and Letter 14-126, issued in 2014, on which many CPOs had relied for a dozen years.

 

 

On December 19, 2025, the MPD 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 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restores an exemption from registration formerly set forth in CFTC Rule 4.13(a)(4) (the QEP Exemption) that was repealed in 2012.

 

Read more about Letter 25-50 in Sidley’s client Update.

 

 

On October 15, 2014, the Division of Swap Dealer and Intermediary Oversight (DSIO) of the CFTC published CFTC No-Action Letter No. 14-126 (Letter 14-126), stating that, under certain conditions, DSIO would not recommend that the CFTC commence an enforcement action against a CPO that has delegated certain of its responsibilities as a CPO (a Delegating CPO) to another person (a Designated CPO) that will serve as the CPO in lieu of the Delegating CPO. Letter 14-126 was beneficial to general partners, directors, and others because it provided that their delegations of the CPO function to a third party would not be deemed to evade the CPO registration requirements of the Commodity Exchange Act and CFTC Regulations.

 

One of the conditions of Letter 14-126 was that the Designated CPO must be registered with the CFTC as a CPO. This requirement created uncertainty about whether a Delegating CPO that delegates the CPO role to a Designated CPO that intends to rely on Letter 25-50 may avail, or continue to avail, itself of CPO registration relief under Letter 14-126.

 

 

Subsequent to the publication of Letter 25-50, the Managed Funds Association (MFA) brought this issue to the attention of MPD (a successor division to the DSIO), and MPD published Letter 26-06 in response at MFA’s request.

 

Letter 26-06 resolves the uncertainty caused by the potential unintended “gap” between Letter 25-50 and Letter 14-126 by stating that MPD will not recommend that the CFTC commence an enforcement action against a Delegating CPO for failure to register as a CPO when all of the criteria of Letter 14-126 are satisfied except that the Designated CPO is a “QEP No-Action CPO” instead of being a registered CPO. MPD defines a “QEP No-Action CPO” as any CPO that meets the requirements of Letter 25-50 and relies on the Letter 25-50 no-action position to not register as a CPO or to withdraw from registration as a CPO. The requirements to rely on Letter 25-50 relief remain the same.

 

The relief provided by Letter 26-06 provides welcome clarification to the industry that existing or new CPO delegation arrangements designed to satisfy Letter 14-126 are appropriate for pools operated pursuant to Letter 25-50.
   

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