S3 - 1.3

Question 1

What is a CTA?

Answer 1

Commodities Trading Advisor

Question 2

What is the CFTC?

Answer 2

Commodity Futures Trading Commission

Question 3

What is the NFA?

Answer 3

National Futures Association

Question 4

What is an IB?

Answer 4

Introducing broker

Question 5

What is a CPO?

Answer 5

Commodity Pool Operator

Question 6

Who must register with the CFTC and be a member of the NFA?

Answer 6

FCMs, CTAs, CPOs and IBs

Question 7

Do employees of FCMs, CTAs, CPOs and IBs need to register in any way?

Answer 7

Ye2s, they must 1) register with CFTC as associated Persons, and 2) become Associated Members of the NFA

Question 8

What do FCMs do?

Answer 8

1) Take orders and funds from clients

2) Buy/Sell futures + Options on futures

Question 9

What are CFMs members of and what privileges do they have?

Answer 9

CFMs are members of the exchange and have Floor-trading privileges

Question 10

Can FCMs trade their own accounts?

Answer 10

Yes, these are called Proprietary Accounts

Question 11

How do we call an FCMs Own account?

Answer 11

Proprietary account

Question 12

Other names for FCMs

Answer 12

Commission house, Brokerage firm, Wire-houses

Question 13

Can firms not members of the exchange trade in the exchanges?

Answer 13

Yes - a FCM represents IBs (Introducing Brokers) by entering a Guarantee Agreement

Question 14

What if the IB violates exchange rules?

Answer 14

The Guarantee Agreement makes the FCM liable for the IBs actions

Question 15

What is a different name for a Bunched Order?

Answer 15

Block Trade

Question 16

What is a Bunch Trade or Block Order?

Answer 16

Customer and Proprietary orders together -

1) No need to show allocation before the trade
2) Must report final allocation in written after trade

Question 17

What is a Fully-Disclosed IB account?

Answer 17

FCM list in which IB’s customers are known

Question 18

What’s another name for a non-clearing FCM?

Answer 18

Correspondent FCM

Question 19

What’s another name for a correspondent FCM?

Answer 19

Non-clearing FCM

Question 20

Omnibus Account

Answer 20

Account in which an clearing FCM carries the account of a non-clearing FCM (Correspondent FCM/firm)

Question 21

Does a Correspondent FCM need to disclose details of its clients?

Answer 21

NO

Question 22

Whose margin position does the clearing FCM need to know?

Answer 22

Only the Correspondent Firm’s but not those of its clients

Question 23

Is an Omnibus account the same as an Investment Company Account?

Answer 23

NO