On August 18, 2026, the Commodity Futures Trading Commission published a “Notice of Proposed Rulemaking” that would add a new exemption from commodity pool operator (CPO) registration for certain SEC-registered investment advisers and would increase the capital contribution threshold under the existing small-pool exemption. The proposal is intended to reduce overlapping CFTC and SEC regulation for private funds whose investors are limited to sophisticated persons.
Proposed Regulation 4.13(a)(4) – New RIA Exemption
The centerpiece of the proposal is a new exemption under Proposed Regulation 4.13(a)(4). An SEC-registered investment adviser could claim the exemption on a pool-by-pool basis with respect to a commodity pool if the following conditions are met:
- Interests in the pool are exempt from registration under the Securities Act of 1933 and are offered and sold without marketing to the public in the United States (general solicitation under Rule 506(c) is expressly permitted).
- The adviser reasonably believes that:
- Each natural-person participant (including any self-directed employee benefit plan) is a “qualified eligible person” under the categories in Regulation 4.7(a)(6)(i) that do not require satisfaction of the portfolio requirement; and
- Each non-natural-person participant is either a qualified eligible person under Regulation 4.7(a)(6) or an accredited investor under Rule 501(a)(1)–(3), (a)(7), or (a)(8).
- The adviser files Form PF with respect to the pool if required to do so under the Advisers Act and related rules.
Unlike the de minimis exemption in Regulation 4.13(a)(3), the proposed exemption is not conditioned on the amount of commodity interest trading conducted by the pool. Advisers claiming the exemption would still be subject to the recordkeeping requirements of Regulation 4.13(c) and would need to file the standard notice of exemption with the National Futures Association.
The proposal would also restore related CTA registration relief by amending Regulation 4.14(a)(8)(i)(D) so that commodity trading advice directed solely to pools relying on the new 4.13(a)(4) exemption would not trigger CTA registration.
Small-Pool Exemption Threshold Increase
Separately, the Commission proposes to raise the aggregate gross capital contributions threshold under the existing small-pool exemption in Regulation 4.13(a)(2) from $400,000 to $800,000. The 15-participant limit and the existing exclusions for contributions from the CPO, CTA, their principals, and certain family members would remain unchanged. The increase is designed to restore the original economic scope of the exemption after more than two decades of inflation.
Background and Relationship to Staff Letter 25-50
The proposed exemption is intended to codify, with certain refinements, the no-action position taken by the Market Participants Division in Staff Letter 25-50 (December 2025). That letter temporarily restored relief similar to the QEP exemption that existed under former Regulation 4.13(a)(4) before its rescission in 2012. If adopted, the final rule would supersede the staff letter and provide greater legal certainty.
Practical Implications for Advisers
For many SEC-registered advisers that operate private funds investing in futures, swaps, or other commodity interests, the proposal offers a clear path to eliminate dual CPO registration, Form CPO-PQR reporting, NFA membership obligations, and the associated disclosure-document requirements for qualifying pools—while remaining fully subject to the Advisers Act and Form PF.
Key practical considerations include:
- Confirming that natural-person investors meet the specific non-portfolio QEP categories rather than relying solely on accredited-investor or qualified-purchaser status.
- Evaluating existing investor bases and subscription processes for any needed adjustments.
- Coordinating the transition from reliance on Staff Letter 25-50 (including the treatment of any required redemption offers under Regulation 4.13(e)).
- Assessing whether the higher small-pool threshold creates new flexibility for smaller or family-related vehicles.
The exemption is available on a pool-by-pool basis, so an adviser may continue to register (or rely on other exemptions) for some pools while claiming the new relief for others.
Comment Period and Next Steps
Comments are due 45 days after the proposal is published in the Federal Register. Advisers that currently rely on Staff Letter 25-50 or that operate private funds with commodity interest exposure should review the proposal carefully and consider submitting comments, particularly on transition mechanics and the precise contours of the natural-person QEP standard.
Vedder’s Investment Services Group is closely monitoring the rulemaking and is available to assist clients in assessing eligibility, preparing comments, or planning any transition from current registration or no-action status.
If you have any questions about this article, please contact Joe Mannon at jmannon@vedder.com or any other Vedder attorney with whom you have worked.
