Company: DEFI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001999371-25-017892
Chunk: 24

Company: Tidal Commodities Trust I
Filing Date: 2025-11-14
Form: 10-Q
Item: Item 8
Chunk 24
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 the case of exchange traded futures contracts, the counterparty to an over the counter futures contract is generally
a single bank or other financial institution. As a result, there will be greater counterparty credit risk in over the counter transactions.
There can be no assurance that any counterparty, clearinghouse, or their financial backers will satisfy their obligations to the
Fund.

The Sponsor will attempt to manage the
credit risk of the Fund by following certain trading limitations and policies. In particular, the Fund intends to post margin and
collateral and/or hold liquid assets that will be equal to approximately the face amount of the futures contracts it holds. The
Sponsor will implement procedures that will include, but will not be limited to, executing and clearing trades and entering into
over the counter transactions only with parties it deems creditworthy and/or requiring the posting of collateral by such parties
for the benefit of each Fund to limit its credit exposure.

The CEA requires
all Future Commission Merchants (the “FCMs”), such as the Fund’s clearing brokers, to meet and maintain specified
fitness and financial requirements, to segregate customer funds from proprietary funds and account separately for all customers’
funds and positions, and to maintain specified books and records open to inspection by the staff of the CFTC. The CFTC has similar
authority over introducing brokers, or persons who solicit or accept orders for commodity interest trades but who do not accept
margin deposits for the execution of trades. The CEA authorizes the CFTC to regulate trading by FCMs and by their officers and
directors, permits the CFTC to require action by exchanges in the event of market emergencies, and establishes an administrative
procedure under which customers may institute complaints for damages arising from alleged violations of the CEA. The CEA also gives
the states powers to enforce its provisions and the regulations of the CFTC.

On November 14, 2013, the CFTC published
final regulations that require enhanced customer protections, risk management programs, internal monitoring and controls, capital
and liquidity standards, customer disclosures and auditing and examination programs for FCMs. The rules are intended to afford
greater assurances to market participants that customer segregated funds and secured amounts are protected, customers are provided
with appropriate notice of the risks of futures trading and of the FCMs with which they may choose to do business, FCMs are monitoring
and managing risks in a robust manner, the capital and liquidity of FCMs are strengthened