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  • commodity exchange act

    A question about futures trading, and an issue in that. The commodity exchange act doesn't have, or at least i can't find them, rules about charts/timeframes which a brokerage firm needs to follow. If no rules about charts/timeframes can't be found there, which paragraph, act, rulebook, does apply? If there is a rule of course, in that way i should go to a lawyer, which in don't have the money for.., but maybe some regulator will/can help then.
    My issue is about banning charts/timeframes by the brokerage firm, and i am trying to figure out if it is allowed or not. It costed me money, and somehow i have the feeling that some rules where violated. CFTC and SEC won't dive that deep so i put my question here. Banned charts/timeframes how difficult can it be, pretty difficult!..
    Which act, paragraph, rulebook, justify the banning of charts/timeframes?, is maybe a better question...

    Ed, from the Netherlands

  • #2
    Hi Ed, from the Netherlands.

    This is a very complicated field, made even more so by the laws that we have that govern commodities and securities.
    Title 17 of the Code of Federal Regulations (CFR) contain the laws that regulate the commodities and exchange commissions: https://www.law.cornell.edu/cfr/text/17
    Commodities are dealt with in Chapter 1 of this Title: https://www.law.cornell.edu/cfr/text/17/chapter-I

    As you will see, there is a lot of information in there. When we asked an expert, he told us that:
    Sometimes traders make decisions based on historical charts which indicate the timing of when new trades should be made. In other words, they show the historical trading patterns of certain futures, etc., with the thought that these historical trends can indicate where to trade going forward. Often when you see these, there is a legend that says something to the effect of “Past performance is not an indication of future performance.” But clearly the purpose for providing the historical information is to suggest future trading strategies.
    While he did not know about charts, he said that there are general antifraud rules that cover misleading information, etc. E.g.: https://www.law.cornell.edu/cfr/text/17/230.156

    I found a regulation dealing with performance disclosures by commodity pool operators: https://www.law.cornell.edu/cfr/text/17/4.25 which speaks to what information must be disclosed about past performance.
    Part 4 wherein that section is contained deals Commodity Pool Operators and Commodity Trading Advisors, which may be of interest to you: https://www.law.cornell.edu/cfr/text/17/part-4

    I was not able to find a rule about information that is "banned" or ineligible for use or consideration (but, again, there is a lot of information in the laws on the books).

    There also exists information on Investor.gov, a office of the SEC, that explains performance claims for investors: https://www.investor.gov/news-alerts...ormance-claims

    Investor.gov would be a good place to look for further guidance on this topic.

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