Commodity Trading Advisor (CTA) - Registered Professional

Commodity Trading Advisor Definition

A commodity trading advisor (CTA) is a trading professional that manages futures and or options accounts for investors. The CTA is required to register with the U.S. Commodities Futures Trading Commission (CTFC). Due to the increase fraud activity in the financial industry, the U.S. government has passed new legislation to better track and monitor CTAs.

How to Become a Commodity Trading Advisor

There are three requirements to becoming a commodity trading advisor: 1. Pass the Series 3 exam 2. Register through the National Futures Association (NFA) 3. Register with the Commodity Futures Trading Commission

Series 3 Exam

The Series 3 Exam is a 120 question exam that consists of two parts: (1) rules and (2) market knowledge. A tester must answer 70% of the questions correctly to pass the exam.

Register with the NFA

Registering with the NFA requires CTAs to do the following: 1. Provide two forms of identification 2. Complete the fingerprinting service with the NFA 3. Create a disclosure document 4. Complete a performance capsule detailing your annual rate of return

Registering with the CTFC

Registering with the CTFC is a fairly simple process and has been streamlined by the NFA. Currently the NFA will electronically submit all registration materials to the CTFC for approval. Once the CTA has been cleared, they are tracked and monitored by the CTFC. The CTFC requires that commodity trading advisors complete an annual review process to maintain their registration.

Role of a Commodity Trading Professional

CTAs perform number of functions, but their primary role is to manage futures accounts. It is their responsibility to identify trading opportunities in the global futures markets, that will provide investors an above average return, while not exposing the portfolio to risks associated with investing in the stock market.