hey, Assume there’s a company facing both currency exchange rate risk (i.e. importer/exporter) and commodity price risk (i.e. manufacturing copper products). The company wants me to hedge those risk on their behalf - I run a small financial consulting company, so there is no problem with signing the mutual agreement, but - do I need any special licence / permission to execute their orders onto the exchange?
Probably not because you are just doing it on their behalf. If you start managing lots of futures contracts (or similar) you would need to go through all the nonsense leading to Series 3 (which is about as difficult as Series 7).
So is there a difference between executing their orders (which are in a way ‘tailored’ to their needs, not at meant to bring profit) or pure trading/speculating for profit? OK, I can get one such a company, but what if there are twenty of those?
As you go up in participation, your requirements go up. a) Small amount of futures (etc) directed by your requirement - just do the order and don’t worry about it b) Larger number of futures but still less than 10% of your business - file a notice with NFA claiming exclusion from registration because you are too small. c) Directing people to buy or sell futures because you think that they will make money that way - registration as a CTA and pass Series 3 exam.