Commodity Pool Operator and Commodity Trading Advisor Registrations

Investments in commodities can involve significant leverage, requiring a high level of expertise. Regulations came in from the 1970s onwards to help avoid the potential of substantial losses for firms and individuals, including moves to regulate CTAs. Also, while investment into a hedge fund would involve wiring the entire principal investment into the hedge fund, for a CTA, the investor only has to put up the cash needed for the margins.

The total amount of capital in managed futures programs is estimated to exceed $200 billion. After the account has started trading, Optimus monitors the account daily on behalf of the client. Your Optimus Futures advisor will receive a daily equity run detailing all your open positions, netting all profits and losses, and showing the exact daily balances in your account. We will be able to guide you through the positions and tell you what the risk and reward benefits are for each position entered. A statement will also be automatically be sent to your chosen mailing address on every single trade.

Compelling Reasons to Consider Adding Managed Futures to Your Portfolio

Relief from specific compliance obligations is available to certain registered commodity pool operators with respect to the pool(s) they operate, provided that the registered commodity pool operator files the required notice under paragraph (d) of this section and otherwise complies with the conditions of paragraph (d) of this section in operating the exempt pool(s). (g) The filing of a notice of eligibility or the application of “non-pool status” under this section will not affect the ability of a person to qualify for an exemption from registration as a commodity pool operator under § 4.13 in connection with the operation of another trading vehicle that is not covered under this § 4.5. All registered CTAs who manage or exercise discretion over customer accounts or provide commodity trading advice based on, or tailored to, the commodity interest or cash market positions or other circumstances or characteristics of particular clients must be NFA Members. If the commodity trading advisor or any principal thereof trades or intends to trade commodity interests for its own account, the trading advisor must disclose whether clients will be permitted to inspect the records of such person’s trading and any written policies related to such trading.

If the offered pool will use any of the trading programs for which past performance is required to be presented, the Disclosure Document must so indicate. (iv) Material differences among the pools for which past performance is disclosed, including, without limitation, differences in leverage and use of different trading programs, must be described. (5) Where the pool operator will deposit funds received prior to the commencement of trading by the pool, and a statement specifying to whom any income from such deposits will be paid.

How to Become a CTA

The purchase and sale statement shows the date and price entered, and when you exit the trade, the date, price, net profit or loss on the trade, and your account balance. Furthermore, a summary of all transactions showing their results are sent each month for the entire month’s transactions. Therefore, you will always be provided with a written, detailed report of the transactions and the performance of your account. Our Managed Futures Broker services start with one of our brokers conducting a one on one session to help you select a CTA or portfolio of CTA’s that best fits with your investing goals and risk tolerance. We will take you on a “guided tour” of our CTA database and provide you with customized recommendations tailored to your personal investor profile.

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. (1) A commodity pool operator may initially elect any fiscal year for a pool, but the first fiscal year may not end more than one year after the pool’s formation.

Commodity Trading Advisors and Managed Futures

(m) Partially-funded account means a client participation in the program of a commodity trading advisor in which the amount of funds in the client’s commodity interest account over which such commodity trading advisor has trading authority is less than the account size that establishes the client’s level of trading in a commodity trading advisor’s program. A commodity trading advisor, or CTA, is a person or firm that advises clients in the use of derivatives as investments. CTAs are required to be registered by the National Futures Association, the industry’s independent, self-regulatory organization. (4) Every commodity pool operator shall regularly furnish statements of account to each participant in his operations. Such statements shall be in such form and manner as may be prescribed by the Commission and shall include complete information as to the current status of all trading accounts in which such participant has an interest.

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. (b) No commodity trading advisor may use a Disclosure Document dated more than commodities trading advisor twelve months prior to the date of its use. (2) The date when the commodity trading advisor first intends to use the Disclosure Document. (2) No commodity pool operator may use a Disclosure Document or profile document dated more than twelve months prior to the date of its use.

A Quantitative Analysis of Managed Futures Strategies

(3) If a pool is specifically structured to accomplish certain federal income tax objectives, the commodity pool operator must explain those objectives, the manner in which they will be achieved and any risks relative thereto. (C) The notice must be signed by the commodity pool operator in accordance with paragraph (h) of this section. (3) The timeframe within which the commodity pool operator will provide the final report. (5) Where the pool is comprised of more than one ownership class or series, information for the series or class on which the account statement is 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 account statement is not required to include consolidated information for all series. (c) No commodity pool operator may commingle the property of any pool that it operates or that it intends to operate with the property of any other person. (B) Is not otherwise holding itself out as a commodity trading advisor.

(h) Trading manager means, with respect to a pool, any person, other than the commodity pool operator of the pool, having sole or partial authority to allocate pool assets to commodity trading advisors or investee pools. (C) Regarding a pool that is a collective trust fund, the securities of which are exempt from registration pursuant to section 3(a)(2) of the Securities Act of 1933, any bank registered as a commodity pool operator that offers or sells participations in such a pool solely to qualified eligible persons, without marketing to the public, may claim any or all of the relief described in this paragraph (b) with respect to such pool. (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). A commodity trading advisor (CTA) has expertise in trading commodities and related instruments.

Commodity Trading Advisor definition

CTAs are basically managed-futures strategies (because trading commodity futures is way easier and less costly than trading actual commodities), and managed futures are generally set up as a hedge fund structure because that allows higher fees to the owners off of a lower capital base than something like a mutual fund. (ii) Each previously solicited prospective client for the trading program prior to entering into an agreement to direct or to guide such prospective client’s commodity interest account pursuant to the program. The trading advisor may furnish the correction by way of an amended Disclosure Document, a sticker on the Document, or other similar means. If the commodity trading advisor is a sole proprietorship, reference to its trading principals need not be included in the prescribed statement.

If the pool is not continuously offered, the closing date of the offering must be disclosed. Except as otherwise provided herein, a Disclosure Document must include the following information. (3) The acknowledgement specified by § 4.21(b) for each participant in the pool.