Commercial Traders


Commercial Traders – Are the producers and end users of the commodity or futures market. However, other large traders such as swap dealers have been aggregated under this category over the last several years. According to CFTC: “All of a trader’s reported futures positions in a commodity are classified as commercial if the trader uses futures contracts in that particular commodity for hedging as defined in CFTC Regulation 1.3, 17 CFR 1.3(z). A trading entity generally gets classified as a “commercial” trader by filing a statement with the Commission, on CFTC Form 40: Statement of Reporting Trader, that it is commercially “…engaged in business activities hedged by the use of the futures or option markets.” To ensure that traders are classified with accuracy and consistency, Commission staff may exercise judgment in re-classifying a trader if it has additional information about the trader’s use of the markets. A trader may be classified as a commercial trader in some commodities and as a non-commercial trader in other commodities. A single trading entity cannot be classified as both a commercial and non-commercial trader in the same commodity. Nonetheless, a multi-functional organization that has more than one trading entity may have each trading entity classified separately in a commodity. For example, a financial organization trading in financial futures may have a banking entity whose positions are classified as commercial and have a separate money-management entity whose positions are classified as non-commercial.”

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