Do Commodity Pool Operators also need to be registered as Commodity Trading Advisors?

A common question for hedge fund managers which are registered as commodity pool operators is whether they also need to be registered as commodity trading advisors (CTA) with the NFA.  The answer is generally no.

There is no need for a commodity-based hedge fund manager (i.e., CPO) to register as a CTA so long as the manager’s commodity trading advice is restricted solely to advising the pool it is running.  This applies to BOTH CFTC/NFA Registered AND unregistered pool operators.  However, if the CPO has clients outside of the pool which the CPO provides advice to regarding commodities, then the manager may need to be registered as a CTA.

Rule 4.14(a)(4) applies to those managers which are registered as CPOs with the NFA.  Rule 4.14(a)(5) applies to those managers which are not registered (exempt) as CPOs.  The full rules are below.

Rule 4.14(a)(4)

A person is not required to register under the Act as a commodity trading advisor if it is registered under the Act as a commodity pool operator and the person’s commodity trading advice is directed solely to, and for the sole use of, the pool or pools for which it is so registered.

Rule 4.14(a)(5)

A person is not required to register under the Act as a commodity trading advisor if it is exempt from registration as a commodity pool operator and the person’s commodity trading advice is directed solely to, and for the sole use of, the pool or pools for which it is so exempt.
Please contact us if you have any questions.  Other HFLB articles related to this topic include:

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