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Becoming a Commodity Trading Advisor

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Jul 30, 2008 7:22 pm

For the last 10 yrs I’ve worked as a Series 7/63 registered rep.  On a personal basis I’ve traded commodity systems successfully for my own accounts and I’m now considering taking my Series 3 and becoming a CTA to manage other’s accounts for an incentive fee.  This would be commodities only, no stocks, equity options, etc.

Anyone aware of a broker dealer that’ll let me continue to handle my securities activity while trading commodities as an Outside Business Activity?


Jul 30, 2008 9:03 pm

I doubt it.  How would they supervise you?

Jul 30, 2008 10:57 pm

While futures contracts aren’t securities and are not regulated by FINRA but the NFA and CFTC, the 3 is a FINRA administered license. I’m not aware of any context in which you can be dually registered aside from RIA and BD simultaneously. One thing you’ll also need to look into is the time requirement after receiving the 3 to function as a CTA. It’s my understanding (which someone here may be able to confirm) that one must hold the 3 for 2 years before beginning to function as a CTA, although there are apparently waivers for those holding other designations. Referring this biz to others is ok, which could also be accomplished with the shorter 31 exam. Why not register with a BD that offers both platforms? Brokersxpress and Vision Financial do. I’m not aware of others but there are probably a few.

Jul 30, 2008 11:27 pm

xbanker, thanks for your post!  I had heard of BrokersXpress before, but honestly didn’t realize they were setup as a broker dealer. 

  I'm not aware of any length of time that has to be satisfied after passing the Series 3 before one can become a CTA.  I know that you have to register as a CTA within 2 yrs of passing the Series 3.  That's the only timeline to my knowledge.   Again thanks for your insights!
Jul 31, 2008 2:20 am

Just curious, can anyone else indicate if their BD clears futures? Also, fsmart, think LONG and hard before getting into the futures market. While I oo not have a 3, I was studying to be a commodities/futures broker at a national FCM and jumped ship after a week before even taking the exam when I realized almost everyone had at least one arbitration, not to mention a serious death threat to one employee. The firm has since shut down. From a couple people I’m still in contact with who went elsewhere, this is not unusual in the industry. A lot of guys work with a DBA within a futures brokerage firm due to a regulation limiting the percentage or number or brokers within one firm who have a disclosure. I wouldn’t get into this area at all. You will blow up someone’s account big time, get into regulatory nonsense, and turn over your book MUCH more than just keeping it straight on the securities side. I’ll agree but futures side is more “interesting” in some ways, but I find a lot of stuff interesting that I wouldn’t make a career out of. Too much hassle.

Aug 6, 2008 10:48 pm

Why not become an independent RIA and make life simpler w/o a series 7?

Jul 31, 2015 12:42 am

Thanks for this very informative post.
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