Commodity Pool Operators And Commodity Trading Advisors

Disclosure Documents
CPOs and CTAs must disclose to their prospective customers:

  • all upfront fees,
  • performance records,
  • trading strategy,
  • five-year business background of principals, and
  • any conflicts of interest.

Additionally, CPOs and CTAs must offer the same sort of risk disclosure statements that must precede taking on any clients new to futures trading.

Records to be maintained
In addition to the usual financial records, CPOs and CTAs must also maintain a written record of any so-called "alternative execution." These fall into two categories:

  • A "block trade" is a large transaction that is negotiated away from the exchange, but executed on the exchange's floor. The CFTC retains the right to regulate block trades on a case-by-case basis.
  • A "bunched order" is an order entered on behalf of multiple customers.

CPOs and CTAs are governed by the same public communication regulations contained in Rule 2-29, discussed earlier in the chapter. Review that section now and frequently.



Single Stock Futures Regulation

Related Articles
  1. Investing

    Your Futures Are In Good Hands With CTAs

    Profit from up, down and sideways markets with commodity trading advisors.
  2. Investing

    At Least One Hedge Fund Strategy is Successful in 2016

    CTAs have been the rare parties to see big success at a time in which hedge fund returns are generally extraordinarily low.
  3. Investing

    9 Misconceptions About Managed Futures

    Managed futures are not all they're worked up to be. Learn why they are not a good option for investors.
  4. Investing

    The Role Of Speculators In The Commodity Market

    Contrary to popular belief, speculators are important for the market. Find out exactly what they do.
  5. Investing

    All About Liquid Commodities

    You might hear 'liquid commodities' and think of an auction, but they're actually a high-volume, fast paced financial product suitable for day traders.
  6. Investing

    Should You Wade Into The Dark Pools Of Liquidity?

    Dark pools of liquidity allow big investors to trade away from the public eye. They limit market impact but may leave small investors in the cold.
  7. Insights

    Should You Be Afraid Of Dark Pool Liquidity?

    Don't fear the deep end. Dark pool liquidity can help drive down stock cost for everyday investors.
  8. Investing

    These 3 ETFs Suggest Commodities Are Headed Lower (COMT,CCX,DBC)

    The charts of these three exchange traded funds suggest that commodities are stuck in a downtrend and it doesn't look like it will reverse any time soon.
  9. Investing

    3 Commodities-Oriented Mutual Funds to Avoid in 2016 (RYMBX, GSCCX)

    Discover how commodities have performed since selling off at the start of 2016, and find out about the top three commodity mutual funds to avoid in 2016.
  10. Insights

    An Introduction To Dark Pools

    Dark pools are an ominous-sounding term for private exchanges or forums for trading securities; unlike stock exchanges, dark pools are not accessible by the investing public.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center