Background
On December 19, 2025, the CFTC’s Market Participants Division (MPD) issued No-Action Letter 25-50, providing temporary staff-level relief from CPO registration for RIAs operating privately offered commodity pools whose participants are qualified eligible persons (QEPs).
Letter 25-50 was intended to bridge the period until the CFTC completed formal rulemaking to reinstate former Regulation 4.13(a)(4), which provided the same QEP exemption but was rescinded in 2012.
Letter 25-50 conditioned relief from CPO registration on: (1) the CPO being an SEC-registered investment adviser; (2) pool interests being privately offered and exempt under the Securities Act; (3) all participants qualifying as QEPs under Rule 4.7(a)(6) at the time of investment or at the time of reliance on Letter 25-50; and (4) the RIA filing Form PF for the pool. Importantly, Letter 25-50 stated that relying CPOs were not required to offer a redemption right under Rule 4.13(e)(2).
While Letter 25-50 provided welcome relief, no-action letters represent staff positions—not formal CFTC action—and can be modified or withdrawn by staff at any time. In addition, soon after Letter 25-50’s issuance, the MPD issued supplemental no-action relief in Letter 26-06 (published on February 26, 2026) to address a concern that CPOs that delegate their CPO responsibilities and functions (delegating CPOs) to designated CPOs under the no-action relief provided by CFTC Staff Letter 14-126 would lose this relief if the designated CPO deregistered in accordance with Letter 25-50—underscoring the practical complexities associated with the no-action relief.
The CFTC’s new proposed rule would codify this relief, restore a related registration exemption for CTAs and double the size of the aggregate gross capital contribution threshold in the CPO registration exemption for small commodity pools.
What the Proposal Would Do
Proposed exemption from CPO registration (Regulation 4.13(a)(4))
Under the proposed rule, the CFTC would add new paragraph (a)(4) to Regulation 4.13, creating a pool-by-pool CPO registration exemption for RIAs that operate commodity pools (Eligible Pools) that satisfy the following conditions:
- Securities Act Exemption. Pool interests must be exempt from registration under the Securities Act of 1933.
- No Public Marketing. The pool must not be marketed to the public in the United States, except that offerings under Rule 506(c) (general solicitation to verified accredited investors) are permitted.
- SEC-Registered Investment Adviser Status. The operator must be registered as an investment adviser with the SEC under the Investment Advisers Act of 1940.
- Investor Eligibility (with Natural/Non-Natural Person Distinction). At the time of investment or conversion to exempt status: (a) each natural person participant must be a QEP of the type listed in Rule 4.7(a)(6)(i)—that is, those who do not need to satisfy the Portfolio Requirement; and (b) each non-natural person participant may be any QEP or an accredited investor under 17 CFR 230.501(a)(1)–(3), (7), or (8). These types of participants would be Eligible Participants for purposes of the proposed RIA-QEP exemption.
- Form PF Filing (Where Already Required). The RIA must file Form PF for the Eligible Pool but only if required to do so under applicable SEC regulations or Form PF itself.
Related CTA exemption (amending Regulation 4.14(a)(8))
The proposal would allow investment advisers whose derivatives trading advice is directed solely to a CPO claiming the proposed exemption (for Eligible Pools) to be exempt from CTA registration by restoring a cross-reference to Regulation 4.13(a)(4) in the CTA exemption under Regulation 4.14(a)(8)(i)(D).
This would avoid requiring dual CTA and CPO registration for advisory activities related solely to qualifying exempt pools.
Conforming amendments and ongoing obligations
The proposed RIA-QEP exemption would reimpose the standard Regulation 4.13 compliance framework on exempt RIA-CPOs, including:
- Electronic notice of exemption filed with NFA (Regulation 4.13(b)(1)(ii)).
- Representations regarding statutory disqualifications.
- Annual affirmation of continued exemption reliance with the National Futures Association (NFA).
- Prompt updates if exemption conditions are no longer met.
- Books and records requirements under Regulation 4.13(c).
- Disclosure to prospective participants that the CPO is claiming exempt status.
- Potential for special calls by the CFTC or NFA.
Transition and redemption rights (Rule 4.13(e)(2))
The proposed RIA-QEP exemption would require registered CPOs transitioning pools to exempt status to provide written disclosures and an opportunity for existing participants to redeem their interests by restoring a cross-reference to Regulation 4.13(a)(4) in Regulation 4.13(e)(2).
The CFTC preliminarily intends that these redemption rights would not apply to commodity pools of CPOs already relying on Letter 25-50, many of whose operators have already deregistered as CPOs. The CFTC is considering a separate, later effective date for the redemption-rights requirements under Rule 4.13(e)(2).
The proposed rule text, however, does not contain an express carve-out for CPOs that already relied on relief under Letter 25-50, and the Commission is requesting public comment on this approach.
As the proposed RIA-QEP exemption is written, CPOs would be required to offer redemption rights to commodity pool participants to the extent they rely on new Regulation 4.13(a)(4) for the CPO registration exemption and had not already relied on Letter 25-50 for those pools.
Small pool exemption threshold increase
The proposal would double the gross capital contributions threshold for the small pool exemption (Regulation 4.13(a)(2)) from $400,000 to $800,000, reflecting cumulative inflation since the threshold was last updated in 2003. If finalized as written, the 15-participant limit would remain unchanged.
Open Issues
Narrower eligibility for natural person investors
The proposed RIA-QEP exemption is narrower than Letter 25-50 for investors that are natural persons. Letter 25-50 did not differentiate between natural and non-natural persons—all QEPs under Rule 4.7(a)(6) qualified.
The exemption would exclude natural persons who qualify as QEPs solely through the Portfolio Requirement (Rule 4.7(a)(6)(ii))—i.e., those relying on $4 million in securities, $400,000 in margin deposits, or a proportional combination.
If the exemption is finalized as written, investment managers with natural person QEPs who only qualify through the Portfolio Requirement would not be eligible for the proposed exemption.
Accordingly, the proposal’s nuance on QEP eligibility would have a different impact on funds relying on SEC Section 3(c)(1) relief from investment company registration versus those relying on the more common Section 3(c)(7) relief, which—unlike Section 3(c)(1)—requires participants to be Qualified Purchasers.
Under CFTC Rule 4.7(a)(6)(i)(H), all Qualified Purchasers are automatically QEPs without regard to the Portfolio Requirement and thus would be Eligible Participants under the proposed RIA-QEP exemption. Participants in private funds under SEC Section 3(c)(1) would require a more detailed analysis.
Reimposed compliance obligations
Letter 25-50, as implemented through the NFA, proved operationally complex but did not impose the full suite of Regulation 4.13 compliance requirements for exempt CPOs.
Under the proposed RIA-QEP exemption, the standard framework for exempt CPOs would apply, including electronic notice of the exemption to the NFA, annual NFA affirmation, recordkeeping requirements, and disclosure obligations.
Uncertain transition relief for required redemption rights for exempt pool participants
While the CFTC has expressed its preliminary intent not to impose redemption-right obligations on CPOs for commodity pools subject to relief under Letter 25-50, this is not a categorical safe harbor in the proposed RIA-QEP exemption.
The CFTC is considering a later effective date for relief from this requirement but is requesting comment. Until the final rule is published, investment managers should treat the transition as uncertain and evaluate potential redemption exposure for pools transitioning from registered to exempt status.
Supersession of Letter 25-50 is not automatic
Letter 25-50 remains effective by its terms until the CFTC completes rulemaking or determines not to proceed. It has asked commenters whether a final rule should supersede Letter 25-50 in whole or in part.
Until a final rule is published, investment managers should continue to rely on Letter 25-50 to the extent currently applicable.
Letter 26-06 and CPO delegation arrangements
Letter 26-06 provides relief to delegating CPOs under Letter 14-126 when a related designated CPO deregisters under Letter 25-50, allowing the designated CPO to rely on Letter 25-50 without disrupting the delegation arrangement.
The CFTC notes that the proposed RIA-QEP exemption would be broadly available to both delegating and designated CPOs for Eligible Pools, making the Letter 14-126 delegation no-action position unnecessary for such pools.
CPOs involved in delegation arrangements should evaluate whether the proposed RIA-QEP exemption would adequately address their delegation arrangements. The CFTC has requested comment from delegating and designated CPOs on this issue.
Form PF threshold gap
The CFTC and SEC have jointly proposed raising the filing thresholds for Form PF, which could mean that some RIAs would no longer be required to file Form PF.
This change could create a regulatory gap when an RIA claims the proposed CPO exemption while filing neither Form PF nor Form CPO-PQR. The CFTC has expressly requested comment on whether this gap warrants additional or alternative reporting conditions.
Timing and Practical Next Steps
Comment period and effective date
Comments on the proposal are due October 5, 2026, 45 days after publication in the Federal Register.
If the rule is finalized, the CFTC stated that the proposed RIA-QEP exemption would become effective when the final rule is published in the Federal Register.
The CFTC has specifically requested comment on whether a later effective date should apply to the Rule 4.13(e)(2) conforming amendment on redemption rights, particularly for qualifying pools and CPOs that relied on Letter 25-50.
Implications and Next Steps for Investment Managers Relying on Letter 25-50
The CFTC’s proposal represents a significant step toward providing durable, codified relief from duplicative CPO and CTA registration for SEC-registered investment advisers. It would transform the temporary, staff-level relief of Letter 25-50 into formal rules subject to the protections of notice-and-comment rulemaking.
By restoring the CTA exemption at Regulation 4.14(a)(8), the proposal also would eliminate the need for separate CTA registration for advisory activities directed solely to qualifying exempt pools, addressing a compliance pain point that Letter 25-50 addressed only partially.
By tying the reporting condition to existing SEC Form PF requirements rather than imposing a blanket filing obligation, the proposal potentially allows RIAs below applicable Form PF thresholds to rely on the exemption without separate CPO-PQR reporting. The CFTC has expressly asked whether this creates a regulatory gap and invites comment on the issue.
At the same time, the proposal introduces certain refinements, particularly the narrower natural person eligibility standard and reimposed compliance obligations that represent meaningful changes from the status quo under Letter 25-50.
Investment managers currently relying on Letter 25-50, or considering doing so, should remain alert for further developments in the CFTC’s rulemaking process. Pending a final rule, affected managers may wish to review the CFTC’s current proposal and consider its eligibility criteria for their fund structures, paying particular attention to whether any current investors would fall outside the current proposal’s narrower natural person eligibility standard and taking the rule’s redemption obligations into consideration.
Our Investment Funds Group is prepared to help you assess the potential impact of the CFTC’s proposal on your fund operations.
If you have any questions, or would like additional information, please contact one of the attorneys on our Investment Funds team.
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