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Commodity Trading Companies

Commodity trading companies can be firms that trade physical commodities, an introducing broker (IB), futures commission merchant (FCM) or clearing firm, a commodity trading advisor (CTA), or a trading firm that trades futures and options on futures with their own capital. Commodity trading company that work with retail investors for futures trading include IBs, FCMs, and CTAs. Investors seeking exposure to the futures market can work with some or all three of these companies including IBs, clearing firms, and CTAs. Investors with a managed futures account would work with all three but probably only have a relationship with their introducing broker.

Introducing brokers or IBs are commodity trading companies that have a direct relationship with the client and provide advice on trade execution and strategy. Trading accounts can be opened through but not with the introducing broker. The introducing broker is a registered series 3 commodity futures and options broker that is registered with the National Futures Association as an introducing brokerage. An introducing broker has a relationship with the FCM as must have a clearing agreement with them. An introducing broker can also be a guaranteed introducing broker whose operations are guaranteed by their FCM. All accounts opened through a guaranteed introducing broker are carried with the FCM that is guaranteeing the introducing broker. Cedar Asset Management LLC is a guaranteed introducing broker for Dorman Trading.

Futures commission merchants or FCMs are commodity trading companies that are also referred to as the clearing firms. The FCM accepts money or other assets to place orders to buy and sell futures and options on futures. All FCMs are required to be registered with the National Futures Association. Any account opened through Cedar Asset Management LLC is opened with Dorman Trading and funds are held in a segregated funds account. Dorman Trading is one of the oldest, family-operated Futures Commission Merchants. With decades of experience spanning three generations, Dorman Trading has provided the trading community with exceptional customer service and professional support.

Commodity trading advisors or CTAs are commodity trading companies that are licensed and registered with the National Futures Association. CTAs are financial professionals that trade futures accounts for retail and institutional investors. CTAs provide clients with full disclosure documents that outline the trading strategy, fees, and track record for their program. The account holder allows the CTA to trade on their behalf and signs power of attorney on their account over to the CTA of their choosing. Choosing a CTA as a way to invest in managed futures does not remove funds from the account to pool with other investors. Funds are kept in the trading account opened and the program can be stopped at any time. Once positions are liquidated the account can then remove funds from the trading account.

There is a risk of loss in trading futures and options. Futures trading in not appropriate for all investors.