Commodity Trading Advisor CTA Definition, Requirements

The extent to which a participant may be held liable for obligations of the pool in excess of the funds contributed by the participant for the purchase of an interest in the pool. A full description, including a discussion of the costs thereof to the pool, of any material transactions or arrangements for which there is no publicly disseminated price between the pool and any person affiliated with a person providing services to the pool. (5) Where any fee, commission or other expense of the pool has been paid or is to be paid by a person other than the pool, the pool operator must disclose the nature and amount thereof and the person who paid or who is expected to pay it.

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. Clients will know that their advisor is qualified, and has most likely passed a FINRA-administered exam. In addition, clients can check and confirm that the CTA they are working with is registered with both the CFTC and the NFA.

PART 4—COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS

In addition, if you fail, you won’t be able to take the exam for another 30 days. If you fail three times, you will have to wait 180 days every time you want to take the Series 3 exam after that. If you need help managing your investments, a financial advisor can work with you to create a financial plan for your investing goals.

• (B) The disclosure provided with respect to the offered pool complies with the provisions of the Investment Company Act of 1940, the Securities Act of 1933, the Securities Exchange Act of 1934, the regulations promulgated thereunder, and any guidance issued by the Securities and Exchange Commission or any division thereof.
• 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).
• (1) Pool means any investment trust, syndicate or similar form of enterprise operated for the purpose of trading commodity interests.
• A CTA acts much like a financial advisor, except that the CTA designation is specific to providing advice related to commodities trading.

It invests in futures contracts and uses a variety of trading strategies. However, fund managers can actively manage investments commodities trading advisor using discretionary strategies, as well. CTA funds offering a managed futures strategy must be registered with the CFTC and NFA.

Institutional account management

(2) For the purpose of the Disclosure Document delivery requirement, including any offering memorandum delivered pursuant to § 4.7(b)(1) or 4.12(b)(2)(i), the term “prospective pool participant” does not include a commodity pool operated by a pool operator that is the same as, or that controls, is controlled by, or is under common control with, the pool operator of the offered pool. (b) All funds, securities or other property received by a commodity pool operator from an existing or prospective pool participant for the purchase of an interest or as an assessment (whether voluntary or involuntary) on an interest in a pool that it operates or that it intends to operate must be received in the pool’s name. (ii) It is registered under 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.

Generally, CTA registration is required for principals of a firm as well as all employees who take orders from or give advice to the public. CTAs are required to provide advice regarding all forms of commodity investments, including futures contracts, forwards, options, and swaps. There are specific proficient requirements to be registered as a CTA. The National Futures Association (NFA) requires CTA registration as the self-regulatory organization of the industry. At My RIA Lawyer, we provide a variety of commodity trading advisor services that help you become registered and stay in compliance.

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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.

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. Many funds further diversify by using several trading advisors with different trading approaches. (3) Books and records of all other transactions in all other business dealings in trading commodity interests and of all cash market transactions in which the commodity trading advisor and each principal thereof engages.

Commodity trading advisor

Amounts shown must be net of any fees, expenses or allocations to the commodity pool operator. (2) The pool operator must include in the description of the business background of each person identified in § 4.24(f)(1) the name and main business of that person’s employers, business associations or business ventures and the nature of the duties performed by such person for such employers or in connection with such business associations or business ventures. (3) Books and records of all other transactions in all other activities in which the pool operator engages. Those books and records must include cancelled checks, bank statements, journals, ledgers, invoices, computer generated records and all other records, data and memoranda which have been prepared in the course of engaging in those activities. (vi) Any notice or statement filed pursuant to this paragraph (f)(2) must be signed by the commodity pool operator in accordance with paragraph (h) of this section.

Individual investors seeking to obtain futures market profits without having to make the trading decisions in the account. Also, individual investors who trade their own account, and are seeking further portfolio diversification through a different trading program. A number of corporate and institutional investors allocate a portion of their portfolio to managed futures.