Key takeaways:

• The Dodd-Frank Act imposed additional requirements on commodity trading advisors (“CTAs”) and amended the definition of CTA in the Commodity Exchange Act to include any person who engages in the business of advising others on swaps. The Division of Swap Dealer and Intermediary Oversight of the Commodity Futures Trading Commission recently issued a staff advisory to inform the newly expanded class of CTAs and those previously exempt CTAs that are now subject to registration as to the general regulatory framework.
• A CTA with disclosure obligations must disclose to its clients the risks of particular swap transactions that are part of its trading program where such risks constitute either “principal risk factors” or “material information.”
• A CTA that acts as an independent representative to a Special Entity (generally entities subject to subject to Title I of the ERISA) in connection with a swap transaction where the counterparty is a swap dealer or major swap participant must satisfy certain qualifications, and must undertake a duty to act in the “best interests” of the Special Entity.