[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR4.5]

[Page 161-163]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS--Table of Contents
 
        Subpart A--General Provisions, Definitions and Exemptions
 
Sec. 4.5  Exclusion for certain otherwise regulated persons from the definition of the term ``commodity pool operator.''

    (a) Subject to compliance with the provisions of this section, the 
following persons, and any principal or employee thereof, shall be 
excluded from the definition of the term ``commodity pool operator'' 
with respect to the operation of a qualifying entity specified in 
paragraph (b) of this section:
    (1) An investment company registered as such under the Investment 
Company Act of 1940;
    (2) An insurance company subject to regulation by any State;
    (3) A bank, trust company or any other such financial depository 
institution subject to regulation by any State or the United States; and
    (4) A trustee of, a named fiduciary of (or a person designated or 
acting as a fiduciary pursuant to a written delegation from or other 
written agreement with the named fiduciary) or an employer maintaining a 
pension plan that is subject to title I of the Employee Retirement 
Income Security Act of 1974; Provided, however, That for purposes of 
this Sec. 4.5 the following employee benefit plans shall not be 
construed to be pools:
    (i) A noncontributory plan, whether defined benefit or defined 
contribution, covered under title I of the Employee Retirement Income 
Security Act of 1974;
    (ii) A contributory defined benefit plan covered under title IV of 
the Employee Retirement Income Security Act of 1974; Provided, however, 
That with respect to any such plan to which an employee may voluntarily 
contribute, no portion of an employee's contribution is committed as 
margin or premiums for futures or options contracts;
    (iii) A plan defined as a governmental plan in section 3(32) of 
title I of the Employee Retirement Income Security Act of 1974;
    (iv) Any employee welfare benefit plan that is subject to the 
fiduciary responsibility provisions of the Employee Retirement Income 
Security Act of 1974; and
    (v) A plan defined as a church plan in Section 3(33) of title I of 
the Employee Retirement Income Security Act of 1974 with respect to 
which no election has been made under 26 U.S.C. 410(d).
    (b) For the purposes of this section, the term ``qualifying entity'' 
means:
    (1) With respect to any person specified in paragraph (a)(1) of this 
section, an investment company registered as such under the Investment 
Company Act of 1940;
    (2) With respect to any person specified in paragraph (a)(2) of this 
section, a separate account established and maintained or offered by an 
insurance company pursuant to the laws of any State or territory of the 
United States, under which income gains and losses,

[[Page 162]]

whether or not realized, from assets allocated to such account, are, in 
accordance with the applicable contract, credited to or charged against 
such account, without regard to other income, gains, or losses of the 
insurance company;
    (3) With respect to any person specified in paragraph (a)(3) of this 
section, the assets of any trust, custodial account or other separate 
unit of investment for which it is acting as a fiduciary and for which 
it is vested with investment authority; and
    (4) With respect to any person specified in paragraph (a)(4) of this 
section, and subject to the proviso thereof, a pension plan that is 
subject to title I of the Employee Retirement Income Security Act of 
1974; Provided, however, That such entity will be operated in the manner 
specified in paragraph (c)(2) of this section.
    (c) Any person who desires to claim the exclusion provided by this 
section shall file with the Commission a notice of eligibility; 
Provided, however, That a plan fiduciary who is not a named fiduciary 
but who has an agreement with a named fiduciary as described in 
paragraph (a)(4) of this section may claim the exclusion through the 
notice filed by the named fiduciary.
    (1) The notice of eligibility must contain the following 
information:
    (i) The name of such person;
    (ii) The applicable subparagraph of paragraph (a) of this section 
pursuant to which such person is claiming exclusion;
    (iii) The name of the qualifying entity which such person intends to 
operate pursuant to the exclusion; and
    (iv) The applicable subparagraph of paragraph (b) of this section 
pursuant to which such entity is a qualifying entity.
    (2) The notice of eligibility must contain representations that such 
person will operate the qualifying entity specified therein in a manner 
such that the qualifying entity:
    (i) Will use commodity futures or commodity options contracts solely 
for bona fide hedging purposes within the meaning and intent of 
Sec. 1.3(z)(1); Provided, however, That in addition, with respect to 
positions in commodity futures or commodity option contracts which do 
not come within the meaning and intent of Sec. 1.3(z)(1), a qualifying 
entity may represent that the aggregate initial margin and premiums 
required to establish such positions will not exceed five percent of the 
liquidation value of the qualifying entity's portfolio, after taking 
into account unrealized profits and unrealized losses on any such 
contracts it has entered into; And, Provided further, That in the case 
of an option that is in-the-money at the time of purchase, the in-the-
money amount as defined in Sec. 190.01(x) may be excluded in computing 
such 5 percent;
    (ii) Will not be, and has not been, marketing participations to the 
public as or in a commodity pool or otherwise as or in a vehicle for 
trading in the commodity futures or commodity options markets;
    (iii) Will disclose in writing to each prospective participant the 
purpose of and the limitations on the scope of the commodity futures and 
commodity options trading in which the entity intends to engage; and
    (iv) Will submit to such special calls as the Commission may make to 
require the qualifying entity to demonstrate compliance with the 
provisions of this Sec. 4.5(c);

Provided, however, That the making of such representations shall not be 
deemed a substitute for compliance with any criteria applicable to 
commodity futures or commodity options trading established by any 
regulator to which such person or qualifying entity is subject.
    (3) The notice of eligibility must be filed with the Commission 
prior to the date upon which such person intends to operate the 
qualifying entity pursuant to the exclusion provided by this section.
    (4) The notice of eligibility shall be effective upon filing.
    (d)(1) Each person who has claimed exclusion hereunder must, in the 
event that any of the information contained or representations made in 
the notice of eligibility becomes inaccurate or incomplete, file a 
supplemental notice with the Commission to that effect which, if 
applicable, includes such amendments as may be necessary to render the 
notice of eligibility accurate and complete.

[[Page 163]]

    (2) The supplemental notice required by paragraph (d)(1) of this 
section shall be filed within fifteen business days after the occurrence 
of such event.
    (e) An exclusion claimed hereunder shall cease to be effective upon 
any change which would render:
    (1) A person as to whom such exclusion has been claimed ineligible 
under paragraph (a) of this section;
    (2) The entity for which such exclusion has been claimed ineligible 
under paragraph (b) of this section; or
    (3) Either the representations made pursuant to paragraph (c)(2) of 
this section inaccurate or the continuation of such representations 
false or misleading.
    (f) Any notice required to be filed hereunder must be:
    (1) In writing;
    (2) Signed by a duly authorized representative of a person specified 
in paragraph (a) of this section;
    (3) Filed with the Commission at the address specified in Sec. 4.2; 
and
    (4) Filed with the National Futures Association at its headquarters 
office (Attn: Director of Compliance, Compliance Department).

[50 FR 15882, Apr. 23, 1985; 50 FR 18859, May 3, 1985, as amended at 58 
FR 6374, Jan. 28, 1993; 58 FR 43793, Aug. 18, 1993; 65 FR 24128, Apr. 
25, 2000; 65 FR 25980, May 4, 2000]