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TRADERS IN FINANCIAL FUTURES 

Explanatory Notes 

The Traders in Financial Futures (TFF), announced by the Commodity Futures Trading 

Commission (CFTC) on July 22, 2010, builds on improvements to transparency implemented in 

2009 that disaggregated data in the CFTC’s weekly Commitments of Traders (COT) Reports. 

The new report separates large traders in the financial markets into the following four categories: 

Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds; and Other Reportables. 

The legacy COT report separates reportable traders only into “commercial” and “noncommercial” categories. 

The TFF report, like the COT reports, provides a breakdown of each Tuesday's open interest for 

markets in which 20 or more traders hold positions equal to or above the reporting levels 

established by the CFTC. This report is published in futures-only and futures-and-optionscombined formats. The TFF report is published side-by-side with the legacy COT. 

The TFF Report 

The Commission, by regulation, collects confidential daily large-trader data as part of its market 

surveillance program. That data, which also support the legacy COT report, is separated into the 

following categories for the TFF report: 

1) Dealer/Intermediary, 

2) Asset Manager/Institutional, 

3) Leveraged Funds, and 

4) Other Reportables. 

Trader Classification 

The TFF report divides the financial futures market participants into the “sell side” and “buy 

side.” This traditional functional division of financial market participants focuses on their 

respective roles in the broader marketplace, not whether they are buyers or sellers of 

futures/option contracts. The category called “dealer/intermediary,” for instance, represents sellside participants. Typically, these are dealers and intermediaries that earn commissions on 

selling financial products, capturing bid/offer spreads and otherwise accommodating clients. 

The remaining three categories (“asset manager/institutional;” “leveraged funds;” and “other 

reportables”) represent the buy-side participants. These are essentially clients of the sell-side 

participants who use the markets to invest, hedge, manage risk, speculate or change the term 

structure or duration of their assets. 

Staff use Form 40 data1

 and, where appropriate, conversations with traders and other data 

available to the Commission regarding a trader’s market activities to make a judgment on each 

 

1 The Form 40 is required under CFTC Regulation 18.04 to be completed by reportable traders. Failure to file a 

Form 40, or failure to answer truthfully, is a violation of the Commodity Exchange Act and CFTC regulations. 

Violators are subject to criminal or administrative sanctions. An updated Form 40 is requested of a trader every 2 

years or more often at the discretion of CFTC staff if the trader remains reportable. The Form 40 is subject to audits 

or spot checks as conditions warrant. CFTC staff is available to large traders and their representatives to answer 

questions about the proper way to complete a Form 40 and to help interpret it in unusual circumstances.
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trader’s appropriate classification.2

 Some multi-service or multi-functional organizations have 

centralized their futures trading. In such cases, their Form 40 may show occupations and market 

usages related to more than one of the new categories. CFTC Division of Market Oversight 

(DMO) staff place each reportable trader in the most appropriate category based on their 

predominant activity. 

Some parent organizations set up separate reportable trading entities to handle their different 

businesses or locations. In such cases, each of these entities files a separate Form 40 and is 

analyzed separately for determining that entity’s proper TFF classification. A trader’s 

classifications may change over a period of time for a number of reasons. A trader may change 

the way it uses the markets, may trade additional or fewer commodities or may find that its client 

base evolves, for example. These changes may cause DMO staff to change a trader’s 

classifications and categories and/or change the commodities to which a trader’s various 

classifications apply. Moreover, a trader’s classification may change because the Commission 

has received additional information about the trader. 

Content of the Traders in Financial Futures (TFF) Report 

Dealer/Intermediary 

These participants are what are typically described as the “sell side” of the market. Though they 

may not predominately sell futures, they do design and sell various financial assets to clients. 

They tend to have matched books or offset their risk across markets and clients. Futures 

contracts are part of the pricing and balancing of risk associated with the products they sell and 

their activities. These include large banks (U.S. and non-U.S.) and dealers in securities, swaps 

and other derivatives. 

The rest of the market comprises the “buy-side,” which is divided into three separate categories: 

Asset Manager/Institutional. These are institutional investors, including pension funds, 

endowments, insurance companies, mutual funds and those portfolio/investment managers 

whose clients are predominantly institutional. 

Leveraged Funds. These are typically hedge funds and various types of money managers, 

including registered commodity trading advisors (CTAs); registered commodity pool operators 

(CPOs) or unregistered funds identified by CFTC.3

 The strategies may involve taking outright 

positions or arbitrage within and across markets. The traders may be engaged in managing and 

conducting proprietary futures trading and trading on behalf of speculative clients. 

Other Reportables 

Reportable traders that are not placed into one of the first three categories are placed into the 

“other reportables” category. The traders in this category mostly are using markets to hedge 

 

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 For example, staff may consider whether a trader is a member of the International Swaps and Derivatives 

Association (ISDA). 

3 An unregistered fund may have a Part 4 exclusion from CTA/CPO registration or be a non-U.S. entity that is 

unregistered. So-called “hedge funds” are included in this category, regardless of whether they are registered. 
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business risk, whether that risk is related to foreign exchange, equities or interest rates. This 

category includes corporate treasuries, central banks, smaller banks, mortgage originators, credit 

unions and any other reportable traders not assigned to the other three categories. 

Spreading 

The TFF sets out open interest by long, short, and spreading for all four categories of traders. 

“Spreading” is a computed amount equal to offsetting long and short positions held by a trader. 

The computed amount of spreading is calculated as the amount of offsetting futures in different 

calendar months or offsetting futures and options in the same or different calendar months. Any 

residual long or short position is reported in the long or short column. Inter-market spreads are 

not considered. 

Numbers of Traders 

The sum of the numbers of traders in each separate category typically exceeds the total number 

of reportable traders. This results from the fact that “spreading” can be a partial activity, so the 

same trader can fall into either the outright “long” or “short” trader count as well as into the 

“spreading” count. 

In order to preserve the confidentiality of traders, for any given commodity where a specific 

category has fewer than four active traders, the size of the relevant positions will be provided but 

the trader count will not be (specifically, a “·” will appear for trader counts of fewer than four 

traders). 

Historical Data 

Historical data for the TFF report will soon be available back to June 13, 2006. Note that the 

CFTC does not maintain a history of large-trader classifications, so, recent classifications had to 

be used to classify the historical positions of each reportable trader. Due to shifts in trader 

classifications over time (as discussed above), this “backcasting” approach diminishes the data’s 

accuracy as it goes further back in time. Nonetheless, the data back as far as 2006 should be 

reasonably representative of trader classifications over that period. 

Comparison of the TFF Report to the Legacy COT Report and to the Disaggregated COT 

Report for Physical Commodities

The legacy COT reports divide reportable traders into the two broad categories of “commercial” 

and “non-commercial.” The “commercial” trader category has always included traders who 

report that they manage their business risks by hedging in futures. Everyone else is classified as 

“non-commercial.” The Disaggregated COT report for physical commodities separates each of 

the two broad categories (commercial and non-commercial) into two groups. The commercials 

are separated into the more traditional group of “producer/merchant/processor/user,” who incur 

risk from dealing in the physical commodity, and “swap dealers,” who incur risk in the over-thecounter (OTC) derivatives market. The Disaggregated COT report for physical commodities 

breaks the “non-commercial” category of the legacy COT into “managed money” and “other 

reportables.” [See the Explanatory Notes for the Disaggregated COT for a more complete 

explanation at 

http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/disaggregatedcotexplanator

ynot.pdf] 
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The Disaggregated COT report data for physical commodity markets can be re-aggregated to get 

back to the two categories of the COT report. The TFF report, however, is not a disaggregation 

of the COT data for the financial futures markets. The traders classified into one of the four 

categories in the TFF report may be drawn from either the “commercial” or “noncommercial” 

categories of traders in the legacy COT reports. 

Potential Limitations of the Data 

CFTC staff reviews the reasonableness of a trader’s classification for many of the largest traders 

in the markets based upon Form 40 disclosures and other information available to the 

Commission. As described above, the actual placement of a trader in a particular classification 

based upon their predominant business activity may involve some exercise of judgment on the 

part of Commission staff. Moreover, staff classifies traders, not their trading activity. Staff 

generally knows, for example, that hedge funds fall into the “leveraged funds” category, but 

cannot know with certainty that all of that trader’s activity is speculative. The hedge fund might 

be using the foreign exchange futures for hedging the currency exposure on an OTC position, for 

example. When staff finds the need to make a large reporting or classification change, an 

announcement is made and corrections are published as quickly as possible. 

IMPORTANT NOTE: CFTC staff is currently working to upgrade CFTC Form 40 (large-trader 

identification) to improve the way large traders, their occupations and how they use U.S. futures 

and option markets are identified. Thus, it is likely that at the culmination of the Form 40 

upgrade, the TFF report and perhaps other Commission reports may need to be altered to take 

advantage of the improved identification information available to us.