Commodity Advisors Definition Glossary

commodity trading advisor

This requirement may be satisfied through a transfer agent’s maintenance of records or through a list of relevant intermediaries where shares are held in an omnibus account or through intermediaries. (E) The commodity pool operator must maintain in accordance with § 4.23 of this chapter each waiver it has obtained to claim the relief available under paragraph (g)(2)(ii) of this section. (iii) The notice must be signed by the commodity pool operator in accordance with paragraph (h) of this section.

CFTC Orders New York-Based Commodity Pool Operator and … – Commodity Futures Trading Commission

CFTC Orders New York-Based Commodity Pool Operator and ….

Posted: Tue, 28 Mar 2023 07:00:00 GMT [source]

(iii) Any introducing broker through which the client will be required to introduce its account to the futures commission merchant and/or retail foreign exchange dealer and/or swap dealer. This discussion must include, without limitation, risks due to volatility, leverage, liquidity, and counterparty creditworthiness, as applicable to the trading program and the types of transactions and investment activity expected to be engaged in pursuant to such program (including retail forex and swap transactions, if any). (B) At the time of filing the Annual Report with the National Futures Association, certifies that it has received a written waiver from each participant from whom it is required to obtain a waiver to qualify for the relief available under this paragraph (c)(7). The commodity pool operator must maintain the waivers in accordance with § 4.23 and must make the waivers available to the Commission or National Futures Association upon request. Notwithstanding the provisions of paragraph (g)(2)(ii) of this section, the relief made available by this paragraph (c)(7)(iii) will not be available where the commodity pool operator has not previously distributed an audited Annual Report to pool participants and submitted an audited Annual Report to the National Futures Association.

Restructure of Concise Capital Management Master Feeder Hedge Fund

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. The key distinction is whether the adviser manages a pooled investment vehicle. (C) The measure of variability required by §§ 4.35(a)(1)(viii)(A)(2) and (B)(2) may be provided as a range of both positive and negative net lifetime returns, or by any other form of disclosure that meets the objective of disclosure of the variability of returns experienced by clients in the trading program whose accounts were opened and closed during the period specified in § 4.35(a)(5). The net lifetime rate of return shall be calculated as the compounded product of the monthly rates of return for each month the account is open.

commodity trading advisor

(1) The following Risk Disclosure Statement must be prominently displayed immediately following any disclosures required to appear on the cover page of the Disclosure Document as provided by the Commission, by any applicable federal or state securities laws and regulations or by any applicable laws of non-United States jurisdictions. (ii) Each principal of the pool operator relating to a personal account of such principal. (12) A manually signed copy of each Account Statement and Annual Report provided pursuant to § 4.22, 4.7(b) or 4.12(b), and records of the key financial balances submitted to the National Futures Association for each commodity pool Annual Report, which records must clearly demonstrate how the key financial balances were compiled from the Annual Report.

A Quantitative Analysis of Managed Futures Strategies

The CTA registration is required by the National Futures Association, the self-regulatory organization for the industry. A CTA acts much like a financial advisor, except that the CTA designation is specific to providing advice relating to commodities trading. (iv) A commodity trading advisor that is registered, but directs only the accounts of commodity pools for which it is exempt from registration as a commodity pool operator, and though registered, complies with § 4.14(a)(5). If the trading manager has been delegated complete authority for the offered pool’s trading, and the trading manager’s performance is not materially different from that of the pool operator, the performance of the other pools operated by and accounts traded by the pool operator is not required to be disclosed.

Such decline must be expressed as a percentage of the initial month-end net asset value, together with an indication of the months and year(s) of such decline from the initial month-end net asset value to the lowest month-end net asset value of such decline.[1] For purposes of §§ 4.25 and 4.35, a peak-to-valley draw-down which began prior to the beginning of the most recent five calendar years is deemed to have occurred during such five- calendar-year period. (D) Where the pool is comprised of more than one ownership class or series, information for the series or class on which the financial statements are reporting should be presented in addition to the information presented for the pool as a whole; except that, for a pool that is a series fund structured with a limitation on liability among the different series, the financial statements are not required to include consolidated information for all series. (3) The notice of eligibility must be filed with the National Futures Association prior to the date upon which such person intends to operate the qualifying entity pursuant to the exclusion provided by this section. Money managers are also known as portfolio managers or investment managers. Most money managers have the chartered financial analyst (CFA) designation, and are trained to make investment decisions. However, they tend to be focused on choosing equities and bonds for their clients portfolios rather than commodities or futures.

Commodity Trading Advisor (CTA) Definition, Requirements

(ii) for a commodity pool Account Statement or Annual Report distributed to participants, a facsimile of the manually signed oath or affirmation of such representative may be used so long as the manually signed original is retained in accordance with § 4.23. (B) The total value of the participant’s interest or share in the pool as of the end of the reporting period. (viii) The total amount of all other expenses incurred or accrued by the pool during the reporting period. (b) For purposes of this section, “cash market transactions” shall not include transactions involving contracts for the purchase or sale of a commodity for future delivery or transactions subject to Commission regulation under section 4c or 19 of the Act. (B) Is not otherwise holding itself out as a commodity trading advisor.

These trading advisors manage client assets on a discretionary basis using global futures markets as an investment medium. By broadly diversifying across markets, managed futures may simultaneously profit from price changes in stock indices, currencies, treasury futures, bond futures as well as from various commodity markets. Trading advisors can participate in more than 150 global markets; from grains and gold to currencies and stock indices.

Berkshire Asset Management Sells Minority Stake to iM Global Partner

(B) Where the claimant is a commodities trading advisor, be received by the Commission before the date the trading advisor first enters into an agreement to direct or guide the commodity interest account of a qualified eligible person pursuant to § 4.7. (5) A list or other record of all commodity interest accounts of clients directed by the commodity trading advisor and of all transactions effected therefor. (2) The commodity pool operator must electronically file with the National Futures Association, pursuant to the electronic filing procedures of the National Futures Association, the subsequent amendments to the Disclosure Document and, where used, profile document for each pool that it operates or that it intends to operate within 21 calendar days of the date upon which the pool operator first knows or has reason to know of the defect requiring the amendment. (3) The commodity pool operator must continue to use the elected fiscal year for the pool unless it provides written notice of any proposed change to all participants and files such notice with the National Futures Association at least 90 days before the change and the National Futures Association does not disapprove the change within 30 days after the filing of the notice. (i) If a commodity pool operator elects a fiscal year other than the calendar year, it must give written notice of the election to all participants and must file the notice with the National Futures Association within 90 calendar days after the date of the pool’s formation. If this notice is not given, the pool operator will be deemed to have elected the calendar year as the pool’s fiscal year.

  • The high degree of leverage that is often obtainable in commodity interest trading can work against you as well as for you.
  • (a) Subject to paragraph (c) of this section, all information contained in the Disclosure Document must be current as of the date of the Document; Provided, however, that performance information must be current as of a date not more than three months preceding the date of the Document.
  • The high degree of leverage that is often obtainable in commodity futures, options, and forex trading can work against you as well as for you.
  • Each commodity trading advisor registered or required to be registered under the Act must make and keep the following books and records in an accurate, current and orderly manner at its main business office and in accordance with § 1.31.

(4) With respect to any person specified in paragraph (a)(4) of this section, and subject to the proviso thereof, a pension plan that is subject to title I of the Employee Retirement Income Security Act of 1974; Provided, however, That such entity will be operated in the manner specified in paragraph (c)(2) of this section. (3) A complete paper version of the document that complies with the applicable provisions of this part 4 must be provided to the recipient upon request. To become an NFA member you can complete their online membership application and pay a non-refundable fee of $200. 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. Look up the meaning of hundreds of trading terms in our comprehensive glossary.

You should carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage that is often obtainable in commodity futures, options, and forex trading can work against you as well as for you. In some cases, managed commodity accounts are subject to substantial charges for management and advisory fees. It may be necessary for those accounts that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets.

  • This discussion must include, without limitation, risks relating to volatility, leverage, liquidity, counterparty creditworthiness, as applicable to the types of trading programs to be followed, trading structures to be employed and investment activity (including retail forex and swap transactions) expected to be engaged in by the offered pool.
  • We will show you our entire list of approved CTA’s, their track records and present a portfolio selection giving a full explanation of the strategies used and the risks and potential rewards involved.
  • Individuals with the designation will be able to pursue the business they are interested in.
  • CTA performance data tends to be freely available to qualified investors and can be found for instance at BarclayHedge,[10] EurekaHedge,[11] NilssonHedge[12] and a large number of other hedge fund databases.
  • (D) Comply with all other requirements applicable to pool Disclosure Documents under part 4.
  • If the pool is not continuously offered, the closing date of the offering must be disclosed.

What is a commodity trading advisor CFTC?

(A) In general Except as otherwise provided in this paragraph, the term “commodity trading advisor” means any person who— (i) for compensation or profit, engages in the business of advising others, either directly or through publications, writings, or electronic media, as to the value of or the advisability of trading …

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