What is a Commodity Trading Advisor?

This authentication occurs automatically, and it is not possible to sign out of an IP authenticated account. To be a registered CTA, you have to be an NFA member. To become an NFA member you can complete their online membership application and pay a non-refundable fee of $200.

The key distinction is whether the adviser manages a pooled investment vehicle. A commodity trading advisor (CTA) is an individual or firm that provides personalized advice regarding the buying and selling of futures contracts, options on futures, and retail off-exchange forex contracts or swaps. In calculating its aggregate uncollateralized outward exposure and its aggregate potential outward exposure, the person shall not consider its swap positions with counterparties that are majority-owned affiliates.

Commodity trading advisor

Any swap which is primarily based on one or more reference rates, including but not limited to any swap of payments determined by fixed and floating interest rates, currency exchange rates, inflation rates or other monetary rates, any foreign exchange swap, as defined in section 1a(25) of the Act, 7 U.S.C. 1a(25), and any foreign exchange option other than an option to deliver currency. (ii) It is registered under commodities trading advisor the Act as a retail foreign exchange dealer and the person’s trading advice is solely in connection with its business as a retail foreign exchange dealer. Money managers are also known as portfolio managers or investment managers. Like CTAs, they provide personalized advice and manage assets. Most money managers have the chartered financial analyst (CFA) designation, and are trained to make investment decisions.

(ii) Control for purposes of this section means ownership of more than 50 percent of the equity of an issuer of securities included in the index (for purposes of paragraph (3)(iv) of this definition) or another entity (for purposes of paragraph (3)(v) of this definition), or the ability to direct the voting of more than 50 percent of the voting equity an issuer of securities included in the index (for purposes of paragraph (3)(iv) of this definition) or another entity (for purposes of paragraph (3)(v) of this definition). Commodity option transaction; commodity option. These terms each mean any transaction or agreement in interstate commerce which is or is held out to be of the character of, or is commonly known to the trade as, an “option,” “privilege,” “indemnity,” “bid,” “offer,” “call,” “put,” “advance guaranty,” or “decline guaranty,” and which is subject to regulation under the Act and the regulations in this chapter. This term means any person that has clearing privileges such that it can process, clear and settle trades through a derivatives clearing organization on behalf of itself or others.

Actively advise large CTAs and CPOs in connection with:

The Great Salad Oil Swindle of 1963 led to the bankruptcy of 16 firms, including two Wall Street brokerages and a subsidiary of American Express. It sparked a cry for tighter regulation of the commodity futures markets. Advisors who give such advice are required to be registered as a CTA by the National Futures Association (NFA), the self-regulatory organization for the derivatives industry.

The term swap dealer does not include a person that enters into swaps for such person’s own account, either individually or in a fiduciary capacity, but not as a part of regular business. (2) A participant in an alternative trading system that is designated as a contract market pursuant to section 5f of the Act is deemed a member of the contract market for purposes of transactions in security futures products through the contract market. This term means a payment made by a party to a futures, option, or swap to cover the current exposure arising from changes in the market value of the position since the trade was executed or the previous time the position was marked to market. (F) If the swap is not accepted for clearing by a derivatives clearing organization, the insured depository institution reports the swap as required by section 4r of the Act, 7 U.S.C. 6r (except as otherwise provided in section 4r(a)(3)(A), 7 U.S.C. 6r(a)(3)(A), or section 4r(a)(3)(B), 7 U.S.C. 6r(a)(3)(B) of the Act). (5) Insured depository institution swaps in connection with originating loans to customers.

Registration Requirements for Principals and Associated Persons (AP) of CTAs

In other words, CTAs can make a very good income. For purposes of paragraph (4) of this definition, the term State means any state of the United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, or any other possession of the United States. (iii) Positions for which, pursuant to law or a regulatory requirement, the person has assigned an amount of cash or U.S. Treasury securities that is sufficient at all times to pay the person’s maximum possible liability under the position, and the person may not use that cash or those Treasury securities for other purposes.

At the opposite end of the spectrum, many of the CTAs on our platform simultaneously trade over 40 markets worldwide. These CTAs utilize a systematic approach in building and managing portfolios of global futures contracts. Systematic traders utilize computer models to identify patterns such as trends on historical market and economic data.

Register as a CTA

A CPO is an individual or organization which operates and solicits funds for a commodity pool, including a hedge fund that trades futures contracts, options on futures or retail off-exchange forex contracts. A CTA is more broadly defined to include an individual or organization which, for compensation or profit, advises others as to the value of or the advisability of buying or selling futures contracts, options on futures or retail off-exchange forex contracts. In other words, a CPO is most always also a CTA by definition, whereas an individual or organization may be a CTA and not a CPO.