entative.1Commodity Pool Operators, Commodity Trading Advisors, and Commodity Pools Operated under Regulation 4.7: Updating the ‘Qualified Eligible Person’ Definition; Adding Minimum Disclosure Requirements for Pools and Trading Programs; Permitting Monthly Account Statements for Funds of Funds; Technical Amendments, Final Rule (Sept. 12, 2024).2 17 C.F.R. § 4.7(b)(2).3 Under Rule 4.7, a person can qualify as a QEP without satisfying the Portfolio Requirement thresholds if the CPO or CTA reasonably believes that the person is a futures commission merchant, swap dealer, retail foreign exchange dealer, broker dealer, CPO, CTA, or investment adviser acting for its own account. 17 C.F.R. § 4.7(a)(2).4Commodity Pool Operators, Commodity Trading Advisors, and Commodity Pools: Updating the ‘Qualified Eligible Person’ Definition; Adding Minimum Disclosure Requirements for Pools and Trading Programs; Permitting Monthly Account Statements for Funds of Funds; Technical Amendments, Proposed Rule, 88 FR 70852, 70863 (Oct 12. 2023). The Commission defined funds of funds as “pools that invest in unrelated funds, pools, or other collective investment vehicles.” Id. at 88 FR at 70856, n 42.5See 17 C.F.R. §§ 4.7(b)(2) and (c)(1).

for Pools and Trading Programs; Permitting Monthly Account Statements for Funds of Funds; Technical Amendments (89 FR 78793). A Section 3(c)(7) fund is a pooled investment vehicle that restricts investors to “qualified purchasers” and complies with the additional requirements set forth in Section 3(c)(7) of the Investment Company Act. A Section 3(c)(1) fund is a pooled investment vehicle that has no more than 100 beneficial owners (or 250 beneficial owners for a venture capital fund) and complies with the additional requirements set forth in Section 3(c)(1) of the Investment Company Act. CFTC Rule 4.13(a)(3)(iii) sets out the investor suitability requirements.Commodity Futures Trading Commission, Proposed Rule, Commodity Pool Operators, Commodity Trading Advisors, and Commodity Pools: Updating the ‘Qualified Eligible Person’ Definition; Adding Minimum Disclosure Requirements for Pools and Trading Programs; Permitting Monthly Account Statements for Funds of Funds; Technical Amendments (88 FR 70852).[View source.]

. persons without Securities Act registration. Throughout this Dechert OnPoint, separately managed accounts and sub-advisory relationships advised under CFTC Rule 4.7(c) are referred to as “exempt accounts” which is their regulatory category under CFTC Rule 4.7(a)(1)(ii).Commodity Pool Operators, Commodity Trading Advisors, and Commodity Pools Operated under Regulation 4.7: Updating the ‘Qualified Eligible Person’ Definition; Adding Minimum Disclosure Requirements for Pools and Trading Programs; Permitting Monthly Account Statements for Fund of Funds; Technical Amendments (Final Rule Release). At times, this Dechert OnPoint tracks the text of the Final Rule Release and current CFTC rules without quotation marks.Commodity Pool Operators, Commodity Trading Advisors, and Commodity Pools: Updating the ‘Qualified Eligible Person’ Definition; Adding Minimum Disclosure Requirements for Pools and Trading Programs; Permitting Monthly Account Statements for Funds of Funds; Technical Amendments, 88 Fed. Reg. 70852 (Oct. 12, 2023).Dechert Files a Comment Letter in Response to the CFTC Rule 4.7 Rule Change Proposals (Dec. 13, 2023).Prior to these amendments, the Portfolio Requirement under CFTC Rule 4.7(a)(1)(v) encompassed a person (A) who owns securities (including pool participations) of issuers not affiliated with such person and other investments with an aggregate market value of at least $2 million (securities portfolio test); (B) who has on deposit with a futures commission merchant for its own account at any time during the six-month period preceding either the date of sale to that person of a pool participation in the exempt pool or the date that the person opens an exempt account with the commodity trading advisor, at least $200,000 in exchange-specified initial margin and option premiums, together with required minimum security deposit for retail forex transactions for commodity interest transactions (initial margin and premiums test); or (C) a mix of the funds and property described in (A) and (B), w