Commodity Trading Act 1992 · 2020 Revised Edition · Part 5 · Conduct of Commodity Trading Business
32. Risk disclosure
Feedback & supportNo commodity broker may open a commodity contract account for a customer unless the commodity broker furnishes the customer with a separate written risk disclosure document which must be in such form and manner as may be prescribed by the Board, and receives from the customer an acknowledgment signed and dated by the customer that the customer has received and understood the nature and contents of the disclosure document.
commodity broker
“commodity broker” means a person who (whether as principal or agent) carries on the business of soliciting, or accepting orders, for the purchase or sale of any commodity by way of or relating to any commodity contract, whether or not the business is part of, or is carried on in conjunction with, any other business;
No commodity pool operator may, directly or indirectly, solicit, accept or receive funds, securities or other property from a prospective participant in a pool that the commodity pool operator operates or that the commodity pool operator intends to operate unless, on or before the date it engages in that activity, the commodity pool operator delivers or causes to be delivered to the prospective participant a risk disclosure document which must be in such form and contain such information as the Board may prescribe, and receives from the prospective participant an acknowledgment signed and dated by the prospective participant that the prospective participant has received and understood the nature and contents of the disclosure document.
commodity pool operator
“commodity pool operator” means any person who carries on a business in the nature of a collective investment scheme within the meaning of section 2 of the Securities and Futures Act 2001 and who, in connection therewith, accepts or receives from other persons funds, security or property, either directly or through capital contributions, the sale of shares or other forms of security or otherwise for the purpose of trading in commodity contracts but does not include any person that the Board may prescribe;
No commodity trading adviser may solicit or enter into an agreement with a prospective client for the purpose of managing the prospective client’s commodity trading account or guiding the prospective client’s commodity trading by means of a systematic programme that recommends specific transactions unless the commodity trading adviser, at or before the time the commodity trading adviser engages in the solicitation or enters into the agreement (whichever is the earlier), delivers or causes to be delivered to the prospective client a risk disclosure document in respect of those purposes which must be in such form and contain such information as the Board may prescribe, and receives from the prospective client an acknowledgment signed and dated by the prospective client that the prospective client has received and understood the nature and contents of the disclosure document.
commodity trading adviser
“commodity trading adviser” means any person who —(a)carries on the business of advising others (directly or indirectly, through publications or writings, or by whatever means or media) on the making of commodity contracts, including the advisability of trading in any commodity contract made or to be made on, or subject to the business rules of, a commodity market;(b)as part of a regular business, issues or promulgates analyses or reports concerning the making of commodity contracts; or(c)pursuant to a contract or an arrangement with a customer or other person, undertakes on behalf of that customer or other person (whether on a discretionary authority or otherwise granted by the customer or other person) to make any commodity contract for the purposes of managing the client’s funds, but does not include —(i)a bank or merchant bank licensed under the Banking Act 1970;(ii)a commodity broker, commodity broker’s representative, commodity pool operator or commodity pool operator’s representative;(iii)a person who carries on the business of printing or publishing a newspaper and is the holder of a permit issued under the Newspaper and Printing Presses Act 1974 where —(A)insofar as the newspaper is distributed generally to the public it is distributed only to subscribers to, and purchasers of, the newspaper for value;(B)the advice is given or the analyses or reports are issued or promulgated only through that newspaper; and(C)that person receives no commission or other consideration for giving the advice or for issuing or promulgating the analyses or reports; and(iv)any other person that the Board may prescribe,if and only if the carrying on of the business by the abovementioned persons is solely incidental to the carrying on of their business;
Except as may be provided by any regulations made under this Act, no commodity trading adviser may solicit, accept or secure from an existing or prospective client money, securities or other property in the commodity trading adviser’s name to purchase, margin guarantee or secure any interest of the client in a commodity contract.
commodity contract
“commodity contract” means —(a)a commodity forward contract;(b)any contract made pursuant to trading in differences with respect to a commodity, not being a commodity futures contract; or(c)any contract made pursuant to a transaction in leveraged commodity trading;