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As previously discussed in our client alert, the industry celebrated the no-action relief from registration as a commodity pool operator (CPO) (the Relief). The Relief, however, raised certain questions in connection with the Commodity Futures Trading Commission (CFTC) staff's class delegation relief under CFTC No-Action Letter No. 14-126 (Letter 14-126), which requires that the "Designated CPO" to whom the non-registrant (i.e., the "Delegating CPO") delegates CPO responsibilities be a registered CPO. In particular, the Relief called into question whether private fund general partners or boards of directors of offshore private funds, who are Delegating CPOs, would need to continue delegating CPO responsibilities to a registered CPO pursuant to Letter 14-126 or whether they could instead delegate these responsibilities to a registered investment adviser that relied on the Relief.
The updated position.
On 26 February 2026, the staff of the CFTC's Market Participants Division determined that an additional no-action position addressing this issue was warranted and reissued the Relief with the additional position included. The updated position provides that a Delegating CPO need not register as a CPO when it delegates CPO responsibilities to a Designated CPO that relies on the Relief and, therefore, is not registered as a CPO with respect to the relevant fund, and all other criteria in Letter 14-126 are satisfied.
What does this mean?
Essentially, the updated position allows an existing delegation arrangement under Letter 14-126 to remain intact even if the Designated CPO deregisters in reliance on the Relief, so long as all other conditions of Letter 14-126 continue to be met. The result of the updated position prevents the Relief from inadvertently disrupting pre-existing, CFTC-sanctioned delegation structures.
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