Commercial and Non-commercial Traders Definition

The Commitments of Traders (COT Report) has several key terms you need to understand before you can read the report. The key terms are, Open Interest, Reportable Positions, Commercial and Non-commercial Traders, Non-reportable Positions, Spreading, Changes in Commitments from Previous Reports, Percent of Open Interest, Number of Traders, Old and Other Futures, Concentration Ratios, and Supplemental Report.

Commercial and Non-commercial Traders – In the event, an individual reportable trader is identified to the Commission, the trader is classified either as “commercial” or “non-commercial.”

All of a trader’s reported futures positions in a commodity are classified as commercial.

If the trader uses futures contracts in that particular commodity for hedging as defined in the Commission’s regulations (1.3(z)).

A trading entity generally is classified as a “commercial” by filing a statement with the Commission (on CFTC Form 40) indicating the trader is commercially “…engaged in business activities hedged by the use of the futures or option markets.”

In order to ensure that traders are classified with accuracy and consistency, the Commission staff may exercise judgment in re-classifying a trader, if the Commission has additional information about the trader’s use of the markets.

A trader may be classified as a commercial in some commodities and as a non-commercial in other commodities.

However, a single trading entity can not be classified as both a commercial and non-commercial in the same commodity.

Nonetheless, a multi-functional organization having more than one trading entity may have each trading entity classified separately in a commodity.

For example, a financial organization whose trading in financial futures may have a banking entity whose positions are classified as commercial and have a separate money-management entity whose positions are classified as non-commercial.

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