The CFTC issued an order excluding institutions in the Farm Credit System ("FCS") from the definition of "commodity trading advisor" ("CTA").
On October 28, 2016, the Farm Credit Council petitioned the CFTC for an order that would exclude FCS institutions from the CTA definition in the Commodity Exchange Act. In its petition, the FCC noted that (i) FCS institutions are not within the intent of the CTA definition because their primary business is to provide banking and lending services to farmers, ranchers and agricultural cooperatives, and (ii) any commodity trading advice they provide is "solely incidental to their primary lending business."
In response to the petition, the CFTC issued an order in which it found that FCS institutions are engaged primarily in lending to U.S. farmers, ranchers and agricultural cooperatives, and that any trading advice provided by FCS institutions is solely incidental to that lending conduct. The order is effective immediately.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
