4.7EXEMPT CTAS – QEPS

Certain CTAs market exclusively to “Qualified Eligible Persons” (“QEPs”) as defined in the statute; 17 CFR 4.7. Unless the CTA has complied with all of 17 CFR 4 (rules relating to CTAs), only QEPs are eligible to invest in a 4.7 exempt CTA’s trading program. Qualified Eligible Persons (QEPs) have specific requirements, usually relating to assets, income or net worth, that they must meet, or they may be “non United States Persons,” as defined in the rule. Please see the rule for specific details, as the following is only a summary: In general, QEPs include:

  1. Individuals or Entities that have a significant involvement in investment activities, such as FCMs, broker dealers, CTAs who meet certain requirements, CPOs who meet certain requirements, Registered Investment Advisors, and their knowledgeable employees, as defined in the rule (see the rule for all categories and requirements);
  2. OR Individuals who are “Non-United States Persons”, as defined in the rule;
  3. OR Individuals who own a substantial portfolio comprised of futures contracts or securities, or a combination of both, as defined in the rule

AND

Have met other additional requirements (in addition to the above portfolio requirement) Please see the rule for further categories and requirements.

CFTC Regulation 4.7 full rule regarding QEPs

CFTC rule 4.7 regarding qualified eligible persons (QEPs) is lengthy and complex, going into much greater detail than the summary as listed above. This rule places certain requirements on CTAs and CPOs utilizing its provisions. Please review Rule 4.7 by accessing the above rule using the above link provided. If you have any questions on CFTC rule 4.7 and the QEP requirements, please do not hesitate to contact RCG Managed Futures.