what is a commodity trading advisor cta 
a commodity trading advisor cta is an individual or firm that provides personalized advice regarding the buying and selling of futures contracts options on futures and retail off exchange forex contracts or swaps advisors who give such advice are required to be registered as a cta by the national futures association nfa the self regulatory organization for the derivatives industry understanding a commodity trading advisor cta in 1922 the grain futures act was passed regulating futures trading it was later replaced by the commodity exchange act of 1936 which further regulated commodities and futures trading and required certain trading to be done on exchanges 2the commodity futures trading commission act of 1974 was enacted to amend the commodity exchange act it created the commodity futures trading commission cftc and marked the first use of the term commodity trading advisor cta 3investing in commodities often involves the use of significant leverage and therefore requires a higher level of expertise to trade properly to avoid the potential for large losses the cftc has gradually expanded the requirements for cta registration over time it established the nfa to handle cta registration and ensure that registered members complied with cftc regulations and nfa rules 1a cta is a financial advisor who provides advice specifically related to commodities trading to obtain the cta registration applicants must meet certain proficiency requirements including passing the series 3 national commodity futures exam certain criteria if met can exempt advisors from cta registration 45the great salad oil swindle of 1963 led to the bankruptcy of 16 firms including two wall street brokerages and a subsidiary of american express it sparked a cry for tighter regulation of the commodity futures markets 6exemptions from registrationregistration as a cta by the national futures association is required for individuals or firms that provide advice on commodities trading unless one of the following criteria is met requirementsgenerally cta registration is required for principals of a firm as well as all employees who take orders from or give advice to the public ctas are required to provide advice regarding all forms of commodity investments including futures contracts forwards options and swaps 7cta funda cta fund is a hedge fund that uses a managed futures strategy it invests in futures contracts and uses a variety of trading strategies these may include systematic trading and trend following however fund managers can actively manage investments using discretionary strategies as well cta funds offering a managed futures strategy must be registered with the cftc and nfa 