A CTA is an individual or entity that, for compensation or profit, advises others as to the value of commodity interests or the advisability of trading in commodity interests. 17 C.F.R. § 1.3, Commodity Trading Advisor. Commodity interests include futures, swaps, and commodity options. A person who meets the definition of a CTA must register with the NFA, unless an exemption or exclusion applies.
Registration as a CTA subjects a person to CFTC and NFA rules. Those rules address required disclosures and recordkeeping, among other topics. For example, CTAs must provide prospective clients with disclosure documents that alert the client to risks involved in commodity trading. CTAs must also adhere to strict guidelines when making representations about past performance. Additionally, CTAs must maintain books and records related to client information and commodity interest transactions.
The CFTC provides a number of exclusions and exemptions from CTA registration. The application of an exclusion or exemption depends upon on individual facts and circumstances.