What Is a Commodity Pool Operator (CPO)?
A commodity pool operator (CPO) is a money manager or investment fund (called a commodity pool) that oversees investments made in commodities securities such as futures and options contracts, or foreign exchange (forex) contracts. The commodity pool operator may also make trading decisions or advise other members of the commodity pool on potential investments for the pool.
A CPO is similar to a commodity trading advisor (CTA), but a CTA is an individual or firm that instead provides individualized advice regarding the buying and selling of commodities-related securities.
Key Takeaways
- A commodity pool operator (CPO) manages pooled funds that invest in commodities futures and related securities.
- A CPO may work for a hedge fund or investment fund that takes positions in commodities.
- CPOs must register with the Commodities Futures Trading Commission (CFTC).
Understanding Commodity Pool Operators (CPOs)
A commodity pool is a type of investment fund, but federal regulations require those funds that trade in commodities to register with the Commodities Futures Trading Commission (CFTC) as commodity pools. Commodity pools have been subject to additional reporting requirements since the enactment of the Dodd-Frank Act in 2010.
A commodity pool buys and sells securities that track the underlying prices of goods such as corn or beef or natural resources such as gold or oil. The commodity pool operator is the salesperson who finds new investors for that fund, or pool.
A principal is a partner in the firm and controls the business interests of the commodity pool.An associated person is an employee who solicits orders and seeks new investors for the commodity pool. In short, the associated person is the salesperson for a commodity pool or a supervisor of its sales team.
Commodity pools benefit investors since they gain access to trades that would not be possible for an individual investor. Investing in futures and options contracts can be quite complex, and by deferring to an expert that's licensed to trade derivatives, investors save money from the potential costly mistakes of going it alone when investing in commodity futures.
Commodity pool operators are regulated by the CFTC. They must register with the CFTC as principals or as associated persons. A CPO may also be asked to pass the FINRA Series 31 exam.
Example of a CPO
A CPO may work for a hedge fund or investment fund that takes positions in crude oil through the vehicles of futures or options contracts.
The hedge fund might have underlying equity positions in large oil companies. Typically, as the price of crude oil rises and falls, so do the stock prices of oil-producing companies. The hedge fund might hedge their equity positions with crude oil options contracts. That is intended to reduce the downside risk of holding equity shares in oil producers if there is a bear market in crude oil. The CPO's job would be to solicit new investors in that fund.
FAQs
A commodity pool is a shared private pool of money from multiple participants to speculate in futures, swaps, or options markets. The commodity pool operator (CPO) manages and solicits funds for the pool.
What is a CPO in commodities? ›
A commodity pool operator (CPO) is an individual or organization that operates a commodity pool and solicits funds for that commodity pool.
What is a CPO operator? ›
Certified Pool Operator (CPO) certification is required by health departments to operate a public swimming pool or hot tub/spa. The Pool & Hot Tub Alliance (PHTA) CPO is accredited across Canada, the USA and 105 countries around the world.
What is a commodity pool under the commodity exchange Act? ›
(A) In general The term “commodity pool” means any investment trust, syndicate, or similar form of enterprise operated for the purpose of trading in commodity interests, including any— (i) commodity for future delivery, security futures product, or swap; (ii) agreement, contract, or transaction described in section 2(c ...
Do I need to register as a commodity pool operator? ›
Registration is generally required. Commodity pools, pool operators, and trading advisors generally must register with the CFTC before they can solicit money from investors.
Is commodity broker a good job? ›
commodities trading houses. Top commodities traders are among the best paid in the market, irrespective of where they work. Banks pay top commodities traders incredibly well.
What is a CPO meaning? ›
A chief product officer (CPO) is a corporate title referring to an executive who leads the entire product organization. Alternatively, the CPO is known as VP of product or head of product.
What are the capital requirements for commodity pool operators? ›
Any Member commodity trading advisor ("CTA") or commodity pool operator ("CPO") meeting the criteria is required to maintain adjusted net capital of at least $100,000 during the entire period for which the Member is required to adopt the enhanced supervisory requirements.
Is a commodity pool a fund? ›
Understanding Commodity Pool Operators (CPOs)
A commodity pool is a type of investment fund, but federal regulations require those funds that trade in commodities to register with the Commodities Futures Trading Commission (CFTC) as commodity pools.
What is the difference between a commodity trading advisor and a commodity pool operator? ›
COMMODITY TRADING ADVISORS AND COMMODITY POOL OPERATORS
A formal definition of a CTA is provided under the Commodity Exchange Act (CEA) (P.L. 74-765). CPOs are the organizations managing commodity pools. A CPO solicits or accepts funds, securities or property from prospective investors in the commodity pool.
What is a Charge Point Operator (CPO)? A Charge Point Operator (CPO) is an eMobility industry player that builds EV charging sites, installs hardware from a variety of electric vehicle supply equipment (EVSE) vendors, and ensures optimal ongoing EV charging operations.
What are the levels of CPO? ›
The AOA offers four levels of Paraoptometric certification, Certified Paraoptometric (CPO), Certified Paraoptometric Assistant (CPOA) and Certified Paraoptometric Technician (CPOT) and Certified Paraoptometric Coder (CPOC).
What is commodity exchange in simple words? ›
A commodities exchange is a legal entity that determines and enforces rules and procedures for trading standardized commodity contracts and related investment products. A commodities exchange also refers to the physical center where trading takes place.
Can a commodity pool operator engage in swaps? ›
Commodity Pool Operator (CPO)
A commodity pool is an enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or options on futures, retail off-exchange forex contracts, or swaps, or to invest in another commodity pool.
How do commodity exchanges make money? ›
Commodities, however, do not offer dividends. Instead, commodity returns are primarily generated from profits made from buying low and selling high. In addition, investors in commodity futures can gain or lose from commodity futures contracts.
Is a commodity pool a hedge fund? ›
Many hedge funds–private pools of activity managed capital–are commodity pools. However, instead of investing in stocks, commodity pools invest in a basket of commodity futures contracts and options.
What is the role of a commodity officer? ›
Also referred to as procurement managers, commodity managers oversee the purchase of commodities to assist a company's supply chain. Their main duties include procuring supplies from vendors, evaluating market conditions to mitigate risks, and supervising department personnel.
