- 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
TradingProfit from up, down and sideways markets with commodity trading advisors.
TradingTheir inverse correlation with stocks and bonds make these alternative investments worth getting to know.
InvestingCommodity Trading Advisers are becoming popular with institutional investors, such as hedge funds.
Managing WealthFind out which futures, options or funds will be your perfect commodity portfolio fit.
TradingManaged futures are not all they're worked up to be. Learn why they are not a good option for investors.
MarketsThe Series 3 exam is the quickest way to diversify sales and add futures to your investing options.
MarketsWhen will it be safe to buy commodities (and which ones)? A closer look at the commodities markets and how they move.
MarketsThere are currently 50 physical and virtual commodity markets worldwide where almost 100 primary commodities trade through the exchange of ownership rights.
TradingThese diverse asset classes can provide downside protection and upside potential. Find out how to use them.
ETFs & Mutual FundsThese funds make investing in gold, oil or grain an easier prospect.