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Industry Updates

Changes to CFTC Rules Affects New Cayman Islands Funds Launched in 2012

28 Mar 2012

As your US counsel may have informed you, on 9 February 2012 the US Commodity Futures Trading Commission ("CFTC") rescinded CFTC Rule 4.13(a)(4), which is the exemption from CFTC registration as a Commodity Pool Operator ("CPO") that is commonly used by general partners, managers and sponsors of private funds that trade a variety of commodity interests and futures contracts. 

Accordingly, many of our clients who expect to launch new private fund structures during the course of 2012 are taking advantage of a very brief window of opportunity, whereby the operators of certain investment funds that file for the exemption under Rule 4.13(a)(4) before 24 April 2012 can rely on the exemption until 31 December 2012.  In order to make this filing with respect to a particular investment fund, the fund must be formed prior to filing for the exemption.  If the operators of an investment fund do not form the applicable entity and file for the exemption under Rule 4.13(a)(4) prior to 24 April 2012 they will likely be required to register with the CFTC as a CPO (which can take months) or comply with another potentially more restrictive exemption before launching a new private fund structure.  

We are encouraging all of our clients to contact their US counsel to discuss their individual needs for new Cayman Islands vehicles over the coming months.  We understand that many of our clients could benefit from forming and registering new Cayman Islands vehicles during the next few weeks in anticipation of their future plans to launch new structures.

A vanilla Cayman Islands company, which would be suitable for the initial registration with the CFTC, but which could be tailored to the particular fund structure in due course, can be formed on a same day basis in the Cayman Islands.  Clients who, following discussions with US counsel, decide to establish Cayman Islands vehicles in light of the pending rule changes should speak to their usual Maples and Calder contact, or one of the partners listed above.