SEC3 Compliance is monitoring the CFTC’s proposed restoration of commodity pool operator registration relief for certain SEC-registered investment advisers, which could reduce duplicative CFTC registration requirements for qualifying private fund advisers.

What Happened

The CFTC has proposed a rule that could reduce duplicative regulatory requirements for certain SEC-registered investment advisers that operate private funds with commodity interest exposure.

Proposed a rule to the CFTC Notice of Proposed Rulemaking

The proposal would restore an exemption under CFTC Rule 4.13(a)(4), allowing qualifying SEC-registered advisers to operate certain commodity pools without separately registering as commodity pool operators (“CPOs”). It would also restore related commodity trading advisor (“CTA”) registration relief and increase the capital threshold for the small-pool exemption under Rule 4.13(a)(2) from $400,000 to $800,000.

The proposal builds on CFTC No-Action Letter 25-50, issued in December 2025, which provided interim CPO registration relief to certain SEC-registered advisers.

CFTC No-Action Letter 25-50

A formal exemption would provide greater regulatory certainty, but the proposed rule is not identical to the existing no-action relief.

The proposal is particularly relevant to SEC-registered private fund advisers whose commodity interest activity exceeds the de minimis thresholds under Rule 4.13(a)(3). Those advisers may currently be required to register as CPOs and become members of the National Futures Association (“NFA”) unless another exemption or form of relief applies.

The proposed exemption would be available on a pool-by-pool basis. This would allow an adviser operating multiple funds to evaluate the appropriate CFTC status for each fund rather than applying a single approach across its entire business.

Why This Matters

Investor eligibility may change. One of the most significant differences from Letter 25-50 involves natural-person investors. The proposed rule would impose a narrower eligibility standard for certain individuals. As a result, a fund that qualifies for relief today could have existing investors who would not satisfy the proposed Rule 4.13(a)(4) requirements. This may be particularly relevant to certain Section 3(c)(1) funds and employee investment vehicles.

Form PF treatment would be more flexible. Letter 25-50 requires an adviser to file Form PF for a pool relying on the relief. Under the proposal, Form PF would be required only when the adviser is otherwise required to file it. This distinction could become more important if separately proposed increases to Form PF reporting thresholds are ultimately adopted.

Deregistration may require additional planning. A registered CPO seeking to withdraw its registration and rely on Rule 4.13(a)(4) could, in certain circumstances, be required to provide investors with notice and an opportunity to redeem. For funds with lockups or limited liquidity, that requirement could have meaningful consequences. The CFTC has indicated that it is considering transition treatment for pools already operating under Letter 25-50.

CTA relief would also be restored. The proposal would restore related relief under Rule 4.14(a)(8), potentially allowing qualifying advisers to avoid separate CTA registration when advising eligible pools, subject to the exemption’s other conditions.

Small-pool relief would expand. The proposal would double the aggregate gross capital contribution threshold under Rule 4.13(a)(2) from $400,000 to $800,000, while retaining the existing 15-participant-per-pool limit.

Registration relief does not eliminate CFTC compliance. Advisers relying on the exemption would continue to have applicable NFA filing, annual affirmation, updating and recordkeeping obligations.

Another important consideration is what happens to advisers currently relying on Letter 25-50. If the rule is finalized as proposed, the CFTC expects the new Rule 4.13(a)(4) exemption to supersede the existing Letter 25-50 framework.

Advisers currently relying on the no-action letter therefore should not assume that their current status will automatically carry over. In particular, they should determine whether each affected pool and its existing investors would qualify under the final exemption.

Letter 25-50 remains available under its current terms while the rulemaking is pending.

What Advisers Should Do Now

The proposal is potentially good news for affected advisers, but firms should not assume that they will automatically qualify for the new exemption.

SEC3 recommends that advisers potentially affected by the proposal begin by reviewing:

• Funds currently relying on Letter 25-50 and whether each fund and its existing investors would qualify under the proposed exemption
• Funds relying on the Rule 4.13(a)(3) de minimis exemption
• Registered pools that could potentially qualify for deregistration
• Natural-person investors whose eligibility could change under the proposed standard
• Fund liquidity provisions and potential notice and redemption requirements
• Applicable Form PF and NFA filing obligations

For Letter 25-50 funds, the most important early review may be the investor base, particularly natural-person investors whose eligibility could change under the proposed standard. Registered CPOs considering deregistration should also review fund liquidity provisions and potential notice and redemption requirements before determining whether the new exemption provides a practical path out of registration.

The opportunity needs to be evaluated on a fund-by-fund basis. The proposal could ultimately provide meaningful relief from overlapping SEC and CFTC regulation, but understanding which funds can take advantage of that relief and planning for the transition will be key.

Comments on the proposal are due October 5, 2026.

How SEC3 Compliance Can Help

SEC3 Compliance can assist advisers in evaluating the potential impact of the proposed exemption, reviewing fund and investor eligibility, assessing existing CFTC registration and exemption positions, and identifying compliance and transition considerations if the rule is finalized.

This alert is provided for informational purposes only and does not constitute legal or investment advice.

Need assistance with your compliance program? SEC’s team of experienced compliance professionals can help. For more information, please email us at info@sec3compliance.com, call (212) 706-4029 x 214, or visit our website at www.sec3compliance.com.

SEC3 provides links to other publicly available legal and compliance websites for your convenience. These links have been selected because we believe they provide valuable information and guidance. The information in this e-newsletter is for general guidance only. It does not constitute the provision of legal advice, tax advice, accounting services, or professional consulting of any kind.

Photo by Jhon Jim on Unsplash