CPO/CTA - FAQs

      Who is required to register as a CPO/CTA? image/svg+xml Atoms / Icons / plusExpand

      Registered CPOs and CTAs are subject to substantive regulation under the Commodity Exchange Act and the CFTC Rules. Registered CPOs and CTAs are also required to be members of the National Futures Association (NFA), a self-regulatory organization for the futures and derivatives industry, and therefore they are also subject to NFA rules. You must register as a CPO if you are a manager that is soliciting funds and advising for a commodity pool. Moreover, if you are a manager that advises on separately managed accounts investing in commodities, you must register as a CTA. While some exemptions may exist, please reach out to a Waystone representative to find out if an exemption may apply to your firm.

      Read more
      What is a Commodity Pool Operator (“CPO”)? image/svg+xml Atoms / Icons / plusExpand

      The Commodity Exchange Act defines a CPO as any person:

      • Engaged in a business that is:
        1. of the nature of a commodity pool, investment trust, syndicate, or similar form of enterprise;
        2. who solicits, accepts, or receives from others, funds, securities, or property, either directly or through capital contributions;
        3. the sale of stock or other forms of securities, or otherwise, for the purpose of trading in commodity interests, or
      • Who is registered with the CFTC as a commodity pool operator.
      Read more
      What is a Commodity Trading Adviser (“CTA”)? image/svg+xml Atoms / Icons / plusExpand

      The Commodity Exchange Act defines a CTA as any person who:

      • For compensation or profit, engages in the business of advising others, either directly or through publications, writings, or electronic media, as to the value of or the advisability of trading in commodity interests;
      • For compensation or profit, and as part of a regular business, issues or promulgates analyses or reports concerning any of the activities referred to in the first prong;
      • Is registered with the CFTC as a CTA; or
      • The CFTC, by rule or regulation, may include if the CFTC determines that the rule or regulation will effectuate the purposes of the Commodity Exchange Act.
      Read more
      What are “Commodity Interests” under the Commodity Exchange Act and CFTC Rules? image/svg+xml Atoms / Icons / plusExpand

      Commodity interests generally include the following categories of transactions and instruments:

      • Futures contracts and options on futures contracts;
      • Swaps;
      • Retail foreign currency and commodity transactions described in Section 2(c)(2)(C)(i) or (D)(i) of the Commodity Exchange Act;
      • Commodity options authorized under Section 4c of the Commodity Exchange Act; and
      • Leverage transactions authorized under Section 19 of the Commodity Exchange Act.
      Read more
      Where should I register? image/svg+xml Atoms / Icons / plusExpand

      Under the Commodity Exchange Act, a CPO/CTA is (unless an exemption exists) required to register with the Commodity Futures Trading Commission (CFTC). CPO and CTA Registrations are managed by the National Futures Association (NFA) designated by the CFTC.

      Read more
      What is the registration process for a CTA or CPO? image/svg+xml Atoms / Icons / plusExpand

      To register, a CPO or CTA must complete and file Form 7-R with the NFA together with a nonrefundable registration fee of $200. Form 7-R requires basic information about the registering CPO or CTA, such as its contact information, place and form of organization, location of business records, disciplinary information, branch offices, and other related information. In addition, the CPO or CTA must file Form 8-R with the NFA for each individual principal and associated person of the CPO or CTA, along with a fingerprint card and a nonrefundable registration fee of $85 for each such principal or associated person.

      Read more
      What is the cost and timing associated with CTA and CPO registration renewal? image/svg+xml Atoms / Icons / plusExpand

      The annual registration fee is $750 for an NFA membership. After the payment is submitted, the NFA will review the application, with registration completed within about 3-5 weeks. Please reach out to a Waystone representative for further assistance on registration renewal.

      Read more
      How long does it take to register? image/svg+xml Atoms / Icons / plusExpand

      The process for registering with the CFTC/NFA can vary. The turnaround time will depend on a number of factors, including a firm’s business complexity and the accuracy and completeness of the information submitted.

      Read more
      Do I qualify for an exemption? image/svg+xml Atoms / Icons / plusExpand

      There are exemptions for registering with the CFTC/NFA. Learn more about NFA exemptions here. If you think an exemption may apply to you and/or your firm, please reach out to a Waystone representative for further assistance.

      Read more
      What does Partial Exemptive Relief entail? image/svg+xml Atoms / Icons / plusExpand

      CFTC Rule 4.7 provides an exemption from a number of the requirements applicable to registered CPOs and CTAs. This partial exemptive relief is only available to (a) registered CPOs that offer or sell participations in a pool solely to investors that are “qualified eligible persons” in an offering that is exempt from registration under the Securities Act pursuant to Section 4(2) or Regulation S2 and (b) registered CTAs whose clients are “qualified eligible persons.”

      Read more
      What are some common exemptions available from registering as a CPO? image/svg+xml Atoms / Icons / plusExpand

      A common exemption from registration as a CPO is CFTC Rule 4.13(a)(3). CFTC Rule 4.13(a)(3) exempts from registration operators of privately offered commodity pools that limit their trading in commodity interest positions so that either (i) no more than 5% of the liquidation value of the commodity pool’s portfolio is used as a margin to establish such positions, or (ii) the aggregate net notional value of the commodity pool’s trading in such positions does not exceed 100% of the pool’s liquidation value.

      Read more
      How is de minimus trading in commodities activities calculated? image/svg+xml Atoms / Icons / plusExpand

      The term “notional value” is calculated by multiplying the number of contracts by the size of the contract, in contract units (taking into account any multiplier specified in the contract), by the current market price per unit. For options on futures, multiply the number of contracts by the size of the contract, adjusted by its delta, in contract units (again taking into account any multiplier specified in the contract), by the strike price per unit.

      A firm may net futures contracts with the same underlying commodity across designated contract markets and foreign boards of trade; and swaps cleared on the same derivatives clearing organization where appropriate.

      Read more
      What are some common exemptions available from registering as a CTA? image/svg+xml Atoms / Icons / plusExpand

      Common exemptions from registration are CFTC Rule 4.14(a)(8) and 4.14(a)(10). CFTC Rule 4.14(a)(8) permits limited commodity interest trading advice to be provided to certain entities by an investment adviser that is registered with the SEC or that is otherwise exempt from registration or excluded from the definition of “investment adviser” under the Advisers Act, and that does not otherwise hold itself out as a CTA. Such advice must be “solely incidental” to the securities advice provided by the investment adviser.

      Under CFTC Rule 4.14(a)(10), advisors that have given commodity trading advice to at most 15 persons during the previous 12 months and do not hold themselves out generally to the public as CTAs are exempt from CTA registration.

      Read more
      What is a Form CPO-PQR? image/svg+xml Atoms / Icons / plusExpand

      During a reporting period (individual calendar quarter), a registered CPO that has at least one Pool must submit a Form CPO-PQR. This regulatory filing is due 15 days after the last day of the reporting period under CFTC Regulation 4.27.

      Read more
      What is the NFA Annual Questionnaire? image/svg+xml Atoms / Icons / plusExpand

      NFA members must complete an Annual Questionnaire. The Questionnaire provides data for the NFA’s risk monitoring systems. The data provided also affords the NFA information on members’ activities and operations. In most instances, this will be an initial resource utilized by NFA staff when engaging with a member’s account.

      Read more

      Learn more about our US Compliance Solutions

      Get in touch

      Call us

      Select phone
      • Bermuda (Bermuda)
      • Canada (Canada)
      • Cayman Islands (Cayman Islands)
      • Hong Kong (Hong Kong)
      • India (India)
      • Ireland (Dublin Headquarters)
      • Ireland (Cashel location)
      • Ireland (Maynooth)
      • Luxembourg (Waystone Luxembourg)
      • Philippines (Philippines)
      • Singapore (Singapore)
      • Switzerland (Switzerland)
      • United Arab Emirates (Dubai)
      • United Arab Emirates (Abu Dhabi)
      • United Kingdom (London)
      • United Kingdom (Belfast)
      • United Kingdom (Leeds)
      • United Kingdom (Exeter)
      • United States (New York)
      • United States (San Francisco)
      • United States (Chicago)
      • United States (New Jersey)