Commodity Trading Advisors CTAs

Commodity Trading Advisors CTAs

(iii) Settlement, netting, or novation of obligations resulting from a sale of a commodity in a transaction in the spot market for the commodity. However, good fund managers actively manage investments, using discretionary strategies, such as fundamental analysis, in conjunction with the systematic trading and trend following. Investments in commodities often involve the use of significant leverage and, therefore, require a higher level of expertise to trade properly while avoiding the potential for large losses. There are, however, negative aspects to selecting an emerging CTA over an established CTA. While emerging CTAs may at times outperform their more established counterparts, the attrition rate is also higher. Many emerging CTAs often do not make it past their first year in business and some traders may not have any experience beyond trading for themselves.

This term means initial margin posted by a clearing member with a derivatives clearing organization. The true value of the investment programs offered by CTAs is their portfolio construction approach, which allows investors to simultaneously participate in multiple global market sectors such as foreign exchange, energies, metals, interest rates, equity indices and commodities. (E) Each person who has filed a notice of exemption from registration under this section must, in the event commodities trading advisor that any of the information contained or representations made in the notice becomes inaccurate or incomplete, amend the notice electronically through National Futures Association’s electronic exemption filing system as may be necessary to render the notice accurate and complete. This amendment must be filed within 15 business days after the trading advisor becomes aware of the occurrence of such event. (B) Is not otherwise holding itself out as a commodity trading advisor.

Exemptions

Measures of daily average aggregate uncollateralized outward exposure and daily average aggregate potential outward exposure shall equal the arithmetic mean of the applicable measure of exposure at the close of each business day, beginning the first business day of each calendar quarter and continuing through the last business day of that quarter. (2) 0.2, in the case of positions that are subject to daily mark-to-market margining but that are not cleared by a registered or exempt clearing agency or derivatives clearing organization. This term means all money, securities and property received, directly or indirectly by a leverage transaction merchant from, for, or on behalf of leverage customers to margin, guarantee or secure leverage contracts and all money, securities and property accruing to such customers as the result of such contracts, or the customers’ leverage equity. In the case of a long leverage transaction, profit or loss accruing to a leverage customer is the difference between the leverage transaction merchant’s current bid price for the leverage contract and the ask price of the leverage contract when entered into.

• The derivatives clearing organization need not be organized as a membership organization.
• Certain criteria, if met, can exempt advisors from CTA registration.
• Past performance is not necessarily indicative of future results.
• If a swap is structured such that on specified dates any outstanding exposure is settled and the terms are reset so that the market value of the swap is zero, the remaining maturity equals the time until the next reset date.
• 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.

However, if a person makes an application to limit its designation as a major swap participant to specified categories of swaps, the Commission shall determine whether the person’s designation as a major swap participant shall be so limited. If the Commission grants such limited designation, such limited designation major swap participant shall be deemed to be a major swap participant with respect to each swap it enters into in the swap category or categories for which it is so designated, regardless of the person’s activities in connection with such category or categories of swaps. A person may make such application to limit its designation at the same time as, or after, the person’s initial registration as a major swap participant. (1) Subject to the provisions of paragraph (c)(2) of this section, if a person who is eligible for exemption from registration as a commodity trading advisor under this section nonetheless registers as a commodity trading advisor, the person must comply with the provisions of this part with respect to those clients for which it could have claimed an exemption from registration hereunder.

CFR § 4.14 – Exemption from registration as a commodity trading advisor.

(ii) The supervision of any person or persons so engaged. There are a variety of trading methodologies used to identify trading opportunities and implement risk management strategies. If you don’t have a Risk.net account, please register for a trial. All CTAs are required to register with the US Commodity and Futures Trading Commission and must also be members the US National Futures Association. (2) Two or more legal organizations referred to in paragraph (a)(10)(i)(B)(1) of this section that have identical owners. (C) The notice will be effective upon filing, provided the notice is materially complete.

(ii) The index has been a narrow-based security index for no more than 45 business days over three consecutive calendar months. (ii) Having trading privileges on a registered entity. This term means any board of trade, exchange or market located outside the United States, its territories or possessions, whether incorporated or unincorporated. Any swap that is primarily based on equity securities, including but not limited to any swap based on one or more broad-based indices of equity securities and any total return swap on one or more equity indices.

What is a Commodity Trading Advisor?

For these purposes, the terms daily average aggregate uncollateralized outward exposure and daily average aggregate potential outward exposure shall be calculated the same way as is prescribed in the definition in this section of substantial position, except that these amounts shall be calculated by reference to all of the person’s swap positions, rather than by reference to a specific major swap category. 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. The use of leverage can lead to large losses as well as gains.

This term means a contract market (as defined in § 1.3(h)), a swap execution facility (as defined in § 1.3(rrrr)), or a registered futures association under section 17 of the Act. This term means a request from a futures commission merchant to a customer to post customer initial margin; or a request by a derivatives clearing organization to a clearing member to post clearing initial margin or variation margin. A person that is deemed to be a major swap participant shall continue to be deemed a major swap participant until such time that its swap activities do not exceed any of the daily average thresholds set forth within this rule for four consecutive fiscal quarters after the date on which the person becomes registered as a major swap participant. (3) Otherwise provides clearing services or arrangements that mutualize or transfer among participants in the derivatives clearing organization the credit risk arising from such agreements, contracts, or transactions executed by the participants. A commodity trading adviser is a US regulatory term that refers to a wide range of investment companies and hedge funds which trade futures or other derivatives, most commonly with a systematic strategy. Any commodity trading advisor relying on paragraph (a)(10) of this section shall not be deemed to be holding itself out generally to the public as a commodity trading advisor, within the meaning of section 4m(1) of the Act, solely because it participates in a non-public offering of interests in a collective investment vehicle under the Securities Act of 1933.

Section 1061 Updates to Partnership Agreements

(3) If the cooperative is a cooperative association of producers, the swap is primarily based on a commodity that is not an excluded commodity. (B) Any synthetic loan, including, without limitation, a loan credit default swap or loan total return swap. (B) An issuer of securities that is an issuing entity of an asset-backed security as defined in section 3(a)(77) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(77)). (ii) Does not accept any money, securities, or property (or extend credit in lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result therefrom. This term has the same meaning as “eligible contract participant” as defined in section 1a(18) of the Act.