Last month, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight issued a temporary no-action relief for commodity pool operators of securitization vehicles.

Lexology.com explains: “The March No-Action Letter is one in a series of no-action letters issued by the Division providing relief for securitization vehicles from the requirement that their operator register as a CPO.”

Last year, the Division issued CFTC Letter No. 12-14 which excluded several securitization vehicles in its definition of “commodity pool.” March’s letter states that CPOs must comply with the following provisions during the no-action period:

• The CPO of a securitization vehicle comprising a static pool of assets that does not have either an equity tranche or debt issuances rated lower than BB will not be required to comply with the performance disclosures required under Regulation 4.25 with respect to that securitization vehicle

•  With respect to the calculation of net asset value with respect to the securitization vehicle, fixed income securities rated BB and higher should be treated as debt and all other fixed income securities and equity tranches should be treated as equity

• With respect to the “de minimis” exemption under Regulation 4.13(a) (3), the commodity pool operator of a securitization vehicle that did not or does not pay any initial margin with respect to the vehicle’s swaps positions must use the alternative net notional test under Regulation 4.13(a)(3)(ii)(B) to determine eligibility for exemption from registration under that section

• In lieu of the financial statement requirements under Regulation 4.22 for the operated securitization vehicle, the commodity pool operator of that securitization vehicle provides basic, material information concerning the structure of the securities and distributions thereon; the nature, performance, and servicing of the assets supporting the securities; and any swaps held in that securitization vehicle’s portfolio, including a discussion of that vehicle’s counterparties

• The CPO of a securitization vehicle need not comply with the specific requirements of the reporting obligations under Regulation 4.21(b), the disclosure obligations under Regulations 4.24(a) and (s), or the requirement under Regulation 4.23 that books and records be maintained at the main business office with respect to the operated securitization vehicle

• The CPO of a securitization vehicle with an amortizing pool of assets need not comply with the performance disclosures required under Regulations 4.25(a)(1)(F) and (G) with respect to the operated securitization vehicle

• With respect to the requirement under Regulation 4.24(h) that the CPO of a securitization vehicle disclose the percentage of that securitization vehicle’s assets used to trade commodity interests, the commodity pool operator of that securitization vehicle that holds static swap positions must provide full and complete disclosure regarding the swaps positions and their functions within that securitization vehicle in addition to a percentage.