03-26 ;
1a(6) of the CEAct; Commission rules 1.33(bb), 4.14(a)(9) and 166.3;
Interpretation
The Division of Clearing and Intermediary Oversight has determined that, where an associated person (AP) of an introducing broker (IB) creates a trading program that generates trading signals, and solicits clients solely to execute a "letter of direction" that provides that the IB should execute trades by following the program's signals "as close as reasonably possible," registration as a commodity trading advisor (CTA) is required of either the IB or the AP. DCIO stated that this scenario constituted managing a client's trading under an informal arrangement and, therefore, exemption from CTA registration under rule 4.14(a)(9) was not applicable. DCIO further stated that, if the IB registered as a CT, the AP would not also be required to register as a CTA in his individual capacity.