Client Alert: CFTC Letter 25-50
An Early Holiday Gift for SEC Registered Advisers to Private Funds
January 26, 2026
Amidst the hustle of the holiday season, the Market Participants Division (“MPD”) of the Commodity Futures Trading Commission (“CFTC”) issued a letter that, for investment advisers registered (“RIAs”) with the United States Securities and Exchange Commission (“SEC”), could be viewed as a gift. In a letter issued December 19, 2025, the MPD provided interim no-action relief from commodity pool operator (“CPO”) and commodity trading advisor (“CTA”) registration for RIAs operating one or more pools solely offered to “qualified eligible persons” (“QEPs”) (as defined under CFTC Rule 4.7(a)(6)). The Letter comes on the heels of a push to re-examine whether CFTC Rule 4.13(a)(4) should be reinstated, which prior to its rescission provided an exemption from CPO registration for RIAs who offered interests in commodity pools to solely QEPs.
Though the Letter was issued on an interim basis, its release may be an important signal to sponsors of private funds that the overall framework on CPO and CTA registration could be revisited, particularly for sponsors of large private funds. Before undertaking any steps to seek relief with the CFTC, however, sponsors should conduct a complete review of each pool they manage, as the Letter requires that managers seeking relief claim such relief on a pool-by-pool basis. Furthermore, to claim relief under the Letter, managers must submit a notice to the CFTC by email at mpdnoaction@cftc.gov and meet certain criteria, including those set forth below:
- The manager must currently be required to register as a CPO or be currently relying on an exemption from CPO registration pursuant to CFTC Rule 4.13;
- The manager is an RIA;
- The interests of the pool(s) were offered to participants in an offering that is exempt from registration under the Securities Act of 1933, as amended;
- The Manager reasonably believes at the time of investment that each investor in the pool(s) was a QEP;
- The manager files Form PF with the SEC with respect to the pool(s) covered by the Letter (and the CFTC receives such filing); and
- The manager must follow the same operational and recordkeeping requirements that apply when claiming an exemption under CFTC Rule 4.13(a).
Though it remains to be seen what the ultimate effect of the Letter will be, it could be the case that, following its release, the volume of private funds investing in CFTC regulated products will increase. Prior to the release of the Letter, RIAs who wished to invest in commodities interests typically faced the following choice for the funds they managed: either register as a CPO and/or CTA or avoid such registration by falling within either Rule 4.13 (commonly, Rule 4.13(a)(3)) or the de minimis requirement under Rule 4.5. Now, assuming the criteria in the Letter is satisfied, RIAs may hold commodities interests in amounts above the de minimis exemption, while continuing to avoid registration as a CPO and/or CTA. In particular, given that “Qualified Purchasers” (as defined in Section 2(a)(51)(A) of the Investment Company Act of 1940 (the “40 Act”)) are QEPs, RIAs to private funds (specifically, to large hedge funds with trading strategies targeted at liquid or exchange traded products) who rely on Section 3(c)(7) of the 40 Act and are otherwise not registered as CPOs and/or CTAs may consider whether to increase their holdings of commodities interests without worrying about registration.
Though the Letter could signal a more accommodative stance from the CFTC in the future, it is important to keep in mind that the Letter is not a formal rulemaking, and therefore its scope is limited and subject to change at any time. Furthermore, the CFTC explicitly stated that the relief provided for in the Letter will expire on the earlier of the date that:
- The CFTC releases a formal rule to reinstate the QEP Exemption; or
- The CFTC makes a public determination that it will not re-instate or finalize a rule regarding the QEP Exemption.
The CFTC has not given any indication as to when it will make a decision on the QEP Exemption. As a result, investment fund sponsors and pool operators should only seek reliance on the Letter after careful consultation with counsel, understanding that the CFTC could adopt new or additional guidance at any time.
For further information, contact your CFDB attorney or:
502-439-3140
847-530-7419