Joint Request for Temporary Exclusion of Investment in a Securitization Vehicle as a ”Commodity Interest”

Four industry trade associations submitted a letter to the CFTC requesting that the Division of Swap and Intermediary Oversight (“DSIO”) provide a 9-month temporary exclusion from including an investment in a securitization vehicle as a “commodity interest,” for purposes of § 4.13(a)(3) [Fund Exemption for CPO Registration] and/or § 4.5 [Fund Exclusion for CPO Registration] while DSIO develops guidance on the treatment of such investments in securitization vehicles.  The associations (including the Managed Funds Association, the Investment Adviser Association, the Investment Company Institute, and the Asset Management Group of the Securities Industry and Financial Markets Association) requested that the CFTC grant temporary exclusion, arguing that it is not clear which securitization vehicles are commodity pools and how a pool operator should calculate an investment in a securitization vehicle that is a commodity pool for purposes of §§ 4.13 and 4.5.

The letter stated that, without relief, an operator of a fund that owns interests in a securitization vehicle may need to register as a commodity pool operator with the CFTC by December 31, 2012.  The letter also requested that the CFTC consider applying the Temporary Exclusion to pools that invest in real estate investment trusts (“REITs”), since previous no-action relief granted to certain equity REITs (CFTC Letter No. 12-13) does not apply to mortgage REITs or foreign REITs in which the associations’ members invest.

View letter in full here (links externally to PDF).