Client Alert
On August 18, 2026, the Commodity Futures Trading Commission (“CFTC” or “Commission”) published a Notice of Proposed Rulemaking (“Proposal”) to amend its registration requirements for certain commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) under Part 4 of the CFTC Regulations.1 The Proposal makes three principal changes: (1) it would add an exemption from CPO registration for certain investment advisers registered with the Securities and Exchange Commission (“RIAs”) with respect to commodity pools whose participants are limited to certain sophisticated investors (“Proposed RIA-QEP Exemption”); (2) it would add a related registration exemption for CTAs; and (3) it would increase the total gross capital contributions threshold in the Small Pool Exemption from $400,000 to $800,000 to account for inflation. The Commission preliminarily intends for the Proposal, if adopted, to supersede the no-action positions issued by the Market Participants Division (“MPD”) in CFTC Staff Letter 25-50 (“Letter 25-50”). Comments must be submitted by October 5, 2026.
Background
Part 4 of the CFTC Regulations requires CPOs and CTAs to register with the Commission and comply with disclosure, reporting, and recordkeeping requirements, unless an exemption or exclusion applies. In 2003, the Commission adopted Rule 4.13(a)(4) (the “Original QEP Exemption”), which provided an exemption from CPO registration for operators of privately offered commodity pools whose participants were limited to qualified eligible persons (“QEPs”) and certain accredited investors. The Commission rescinded the Original QEP Exemption in 2012, at a time when it determined that registration and Form PF-like reporting were appropriate for previously exempt CPOs. Many RIAs of private funds engaging in commodity interest transactions then became subject to dual SEC and CFTC oversight, including CPO registration, NFA membership, Form CPO-PQR filings, and other CFTC compliance obligations, unless they could avoid CPO registration by relying on the more restrictive Rule 4.13(a)(3) de minimis exemption or, if registered, mitigate those obligations through Rule 4.7 for funds restricted to QEPs.
In December 2025, consistent with the Trump Administration’s deregulatory agenda and CFTC Chairman Selig’s “minimum effective dose” regulatory approach (consistent with the broader deregulatory agenda reflected in the CFTC’s 2025 Unified Agenda, including consideration of amendments to Rules 4.13(a)(3) and (a)(4)), MPD issued Letter 25-50, which provided a no-action position on CPO and CTA registration for RIAs operating pools limited to QEPs (“QEP No-Action CPOs”), subject to conditions largely consistent with the Original QEP Exemption, until such time that the Commission completes formal rulemaking to reinstate Rule 4.13(a)(4). Letter 25-50 also provided relief from the mandatory redemption offer requirements of CFTC Rule 4.13(e)(2).2 In February 2026, MPD issued a follow-up letter, Letter 26-06, extending the no-action position to CPO delegation arrangements under CFTC Staff Letter 14-126 (“Letter 14-126”). Letter 14-126 provided a no-action position on CPO registration to CPOs who delegate the CPO responsibilities to designated CPOs, subject to certain conditions, including that the designated CPO is registered with the CFTC. Letter 26-06 extended the no-action position in Letter 14-126 to permit delegation of CPO responsibilities to QEP No-Action CPOs and also confirmed that such CPOs would not be required to comply with the requirements of Rule 4.13(e)(2).
The Commission determined that formal rulemaking is necessary to provide durable, transparent, and uniformly applicable regulatory standards, to reduce duplicative regulation of RIAs acting as CPOs (“RIA-CPOs”), and to address practical implementation complexities experienced under the no-action position framework.
Proposed Rule 4.13(a)(4): The Proposed RIA-QEP Exemption
Overview
The Proposed RIA-QEP Exemption) would reinstate a CPO registration exemption at the paragraph reserved since 2012, available to RIAs with respect to commodity pools that meet specified conditions (each qualifying pool, an “Eligible Pool”). The Proposed RIA-QEP Exemption is modeled on the Original QEP Exemption and Letter 25-50, with certain refinements to reflect the Commission’s experience in implementing no-action positions and past CPO exemptions.
Key Conditions
SEC Investment Adviser Registration. The exemption is limited to RIAs. The Commission believes that RIAs are already subject to robust oversight under the Investment Advisers Act of 1940, including conduct standards, examinations, disclosure requirements, and reporting on Form PF, and that this existing federal oversight supports a finding that separate CPO registration would be duplicative.
Private Offering and Limited Solicitation. Interests in an Eligible Pool must be exempt from registration under the Securities Act of 1933, including pursuant to Rule 506(c) of Regulation D (which permits general solicitation to verified accredited investors). This exception accommodates developments under the JOBS Act and harmonizes the exemption with the SEC’s approach to general solicitation under amended Regulation D.
Eligible Participants. Pool participants must be limited to “Eligible Participants,” defined as follows: (i) natural person participants must be QEPs as listed in Rule 4.7(a)(6)(i) (those not required to meet the Portfolio Requirement); and (ii) non-natural person participants must be QEPs or accredited investors as defined in Rule 501(a)(1)–(3), (a)(7), or (a)(8) of Regulation D. This recalibrates the participant condition in Letter 25-50 (which did not differentiate between natural and non-natural persons) to be consistent with the Original QEP Exemption. For reference, the Portfolio Requirement under Rule 4.7 generally requires ownership of at least $2 million in securities and other investments, or at least $200,000 in exchange-specified initial margin and option premiums on deposit with a futures commission merchant, or a pro rata combination thereof.
Form PF Reporting. An RIA-CPO must file Form PF for each Eligible Pool, to the extent required to do so by securities regulations and Form PF, as amended. This condition allows the CFTC and Financial Stability Oversight Council regulators to obtain data needed for market oversight and systemic risk monitoring without imposing separate CFTC reporting obligations.
Conforming Amendments to Rule 4.13
The Proposal reinstates prior cross-references to paragraph (a)(4) throughout Regulation 4.13, which would require compliance with existing provisions regarding:
- Electronic Notice of Exemption (Rule 4.13(b)(1)(ii)): Restores the ability of RIA-CPOs to identify the paragraph (a)(4) exemption in electronic filings with the National Futures Association (“NFA”). RIA-CPOs would also be subject to annual notice filings, representations regarding statutory disqualifications, and recordkeeping requirements.
- Treatment of Certain Pools Operated by Registered CPOs (Rule 4.13(e)(2)): Rule 4.13(e)(2) currently provides that a registered CPO who seeks to transition an existing pool that was operated in full compliance with the Part 4 requirements to an exempt pool in reliance on Rule 4.13(a)(3) must provide written notice of such transition to each prospective pool participant describing the criteria pursuant to which the pool will be operated and must provide each existing participant a right to redeem the participant’s interest in the pool prior to such transition. The proposed amendment to Rule 4.13(e)(2) would extend this framework to pools described in revised Rule 4.13(a)(4). The proposed amendment would ensure participants in pools transitioning from registered to exempt status under Rules 4.13(a)(3) or (a)(4) receive notice, and opportunity to redeem, and ongoing transparency, consistent with the existing protections in Rule 4.13.
Relationship to Letters 25-50 and 26-06
The Commission preliminarily intends the Proposal, if adopted as a final rule, to supersede Letter 25-50 in its entirety. However, because Letter 25-50 provides no-action relief from the requirements of Rule 4.13(e)(2), the Commission preliminarily intends that RIAs relying on Letter 25-50 would generally not be subject to Rule 4.13(e)(2) for such pools. However, like other CPOs claiming an exemption under Rules 4.13(a)(3) and (a)(4), they would be subject to Rule 4.13(e)(2) for pools for which they have not relied on Letter 25-50. The Commission seeks public comment on whether a separate, later effective date with respect to the application of Rule 4.13(e)(2) would appropriately address the issue.
With respect to the no-action position in Letter 26-06 regarding CPO delegation arrangements, the Commission notes that the Proposed RIA-QEP Exemption would be broadly available to both Delegating and Designated CPOs with respect to Eligible Pools, and that a separate delegation no-action position is not necessary where the pool qualifies for the exemption.
Proposed Rule 4.14(a)(8): CTA Exemption for Advisers to Exempt Pools
The Proposal would amend Rule 4.14(a)(8)(i)(D) to restore a cross-reference to Rule 4.13(a)(4), such that the CTA exemption would be available to investment advisers whose commodity interest trading advice is directed solely to a CPO that has claimed an exemption under Proposed Rule 4.13(a)(4) with respect to Eligible Pools. This would restore the integrated functioning of Regulations 4.13 and 4.14 as they operated prior to the 2012 rescission.
Proposed Rule 4.13(a)(2): Inflation-Based Adjustment to the Small Pool Exemption Threshold
Rule 4.13(a)(2) currently provides an exemption from CPO registration for operators of “small pools,” defined as pools with no more than 15 participants and total gross capital contributions across all pools the person operates or intends to operate not exceeding $400,000, subject to certain exclusions for those contributions. The Commission proposes to increase the total gross capital contributions threshold in the Small Pool Exemption from $400,000 to $800,000 to account for the effects of inflation since the threshold was last adjusted in 2003. The Commission determined that $400,000 in January 2003 has the same buying power as approximately $735,097 as of July 2026, and proposes rounding up to the nearest hundred thousand. The proposed amendment would not alter the 15-participant-per-pool limit or the exclusion of certain contributions from the calculation of gross capital contributions.
Practical Implications for Fund Managers
Codification and Durability. For RIA-CPOs currently relying on Letter 25-50, the Proposed RIA-QEP Exemption would provide significantly greater regulatory certainty for compliance planning and fund structuring.
Participant Recalibration. RIA-CPOs currently relying on Letter 25-50, which does not differentiate between natural and non-natural person participants, should review their investor base against the Original QEP Exemption’s
two-tiered participant requirements, which the Proposed RIA-QEP Exemption would reinstate.
Transition for Letter 25-50 Claimants. The Commission has indicated its preliminary intent that RIA-CPOs already relying on Letter 25-50 would generally not be required to comply with the redemption-right and transition provisions in Regulation 4.13(e)(2) for their qualifying pools. However, market participants should monitor the final rule for any later effective date provisions governing this transition.
Small Pool Operators. CPOs operating pools with aggregate gross capital contributions between $400,000 and $800,000 may become newly eligible for the Small Pool Exemption, potentially allowing them to deregister as CPOs and reduce compliance costs.
Form PF Obligations. Because the Proposed RIA-QEP Exemption conditions eligibility on filing Form PF, to the extent required by securities regulations, RIA-CPOs should evaluate their current Form PF reporting obligations in light of the separate joint CFTC/SEC proposed rulemaking to raise Form PF filing thresholds. If the Form PF threshold increases are adopted, certain smaller RIAs may no longer be required to file Form PF and would therefore satisfy the proposed condition without additional burden. RIA-CPOs should assess whether their existing Form PF filings adequately cover each Eligible Pool and monitor developments in both the Form PF joint rulemaking and this Proposal to understand their ongoing reporting posture.
CTA Relief. Investment advisers whose commodity interest trading advice is directed solely to CPOs claiming the Proposed RIA-QEP Exemption would also benefit from the restored CTA exemption, avoiding separate CTA registration for advisory activities related to Eligible Pools.
Comment Period
Interested parties should submit comments within 45 days of publication in the Federal Register. The Commission has specifically requested comment on, among other topics, the appropriateness of the eligibility conditions, the participant limitations, the treatment of CPOs relying on Letter 25-50, the proposed effective date for conforming amendments, and the inflation-adjusted Small Pool Exemption threshold. Clients are encouraged to contact the authors to discuss whether and how to submit comments, particularly on the treatment of CPOs relying on Letter
25-50 and the effective date for conforming amendments—areas where client input could shape the final rule.
- Commodity Pool Operators and Commodity Trading Advisors: Reduction of Duplicative Regulation Through Intermediary Registration Exemptions; Expansion of the Exemption for Small Commodity Pools, Notice of Proposed Rulemaking, 91 Fed. Reg. 54264 (Aug. 21, 2026) (“Proposing Release”).
- CFTC Rule 4.13(e)(2) requires, among other things, that a registered CPO seeking to rely upon the exemption from registration in Rule 4.13(a)(3) offer to each existing pool participant a right to redeem the participant’s interest in the pool, and inform such participants of that right no later than the time the CPO commences operating the pool in reliance on the exemption.
