- Series 31 (Futures Managed Funds Examination)
- A FINRA qualification exam that assesses the competency of an entry-level associated person seeking to solicit funds for managed futures accounts or participate in managed commodity accounts. Passing it qualifies an individual to supervise or engage in limited futures activities without a full commodities license.
- Managed Futures Account
- An investment account in which a professional manager trades futures and options on the client's behalf, typically pooled with other investors' capital. It is the core product that Series 31 registrants are authorized to solicit and service.
- Commodity Pool
- A pooled investment vehicle that combines funds from multiple investors to trade commodity futures and options contracts. Investors share in the pool's gains and losses in proportion to their contributions.
- Commodity Pool Operator (CPO)
- An individual or firm that organizes and operates a commodity pool, solicits investor funds, and is generally required to register with the CFTC and be an NFA member. The CPO is responsible for the pool's overall management and disclosures.
- Commodity Trading Advisor (CTA)
- A person or firm that, for compensation, advises others on the value of or advisability of trading commodity futures, options, or certain other derivatives. CTAs typically must register with the CFTC and belong to the NFA.
- Futures Commission Merchant (FCM)
- A firm that solicits or accepts orders for futures or options contracts and holds customer funds or margin to support those trades. FCMs act as the intermediary between customers and the exchange clearinghouse.
- Disclosure Document
- The document a CPO or CTA must provide to prospective participants before accepting funds, detailing trading strategy, fees, risks, conflicts of interest, and past performance. It is the primary investor-protection disclosure in managed futures.
- National Futures Association (NFA)
- The industry-wide, self-regulatory organization for the U.S. derivatives industry, overseeing registration and conduct of CPOs, CTAs, FCMs, and other futures professionals. Membership is mandatory for most firms dealing in futures.
- Commodity Futures Trading Commission (CFTC)
- The independent U.S. federal agency that regulates the futures, options, and swaps markets. It oversees registration requirements and enforces rules against fraud and manipulation in commodity trading.
- Margin
- The good-faith deposit a customer must post to open and maintain a futures position, serving as performance collateral rather than a partial payment. It includes initial margin to enter a position and maintenance margin to keep it open.
- Passing Score
- The Series 31 exam is scored on 45 questions within a 60-minute time limit, and a candidate must correctly answer 70% to pass. The exam registration fee is $90.
- Hedging
- A risk-management strategy that uses futures or options positions to offset the price risk of an existing or anticipated cash-market position. It aims to reduce exposure to adverse price movements rather than to generate speculative profit.