A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission.

A firm or individual who trades for his own account is called a trader. Commodity contracts include futuresoptionsand similar financial derivatives.

Clients who trade commodity contracts are either hedgers using the derivatives markets to manage risk, or speculators who are willing to assume that risk from hedgers in hopes of a profit.

Ever since the s, the majority of commodity contracts traded are financial derivatives with financial underlying assets such as stock indexes and currencies.

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When executing trades on behalf of a client in exchange for a commission he is acting in the role of a broker. When trading on behalf of his own account, or for the account of his employer, he is acting in the role of a trader.

Floor trading is conducted in the pits of a commodity exchange via open outcry. Commodity futures broker Commission Merchant FCM: Most individual traders do not work directly with a FCM, but rather through an IB or CTA. IBs do not actually hold customer funds to margin. Client funds to margin are held by a FCM associated with the IB. Commodity Trading Advisor CTA: They advise commodity pools and stock option compensation ifrs managed commodity futures broker accounts.

Like an IB, a CTA does not hold customer funds to margin; they are held at a FCM. CTAs exercise discretion over their clients' accounts, meaning that they have power of attorney to trade the clients account on his behalf according to the client's trading objectives. A CTA is generally the commodity equivalent crude oil option chain a financial advisor or mutual fund manager.

Commodity Pool Operator CPO: A commodity pool is essentially the commodity equivalent to a mutual fund. This is the commodity equivalent to a registered does futures trading increase stock market volatility. In the United States, an individual working in any of the above roles must pass the Series 3 National Commodity Futures Examination administered by the Financial Industry Regulatory Authority FINRA.

From Wikipedia, the free encyclopedia. Retrieved from " https: Commodity markets Investment Brokerage firms.

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