General Futures Terminology: Rapid Fire

What this video covers

• Why a floor broker (FB) executes orders for other people and a floor trader (FT) trades strictly for their own account, and how the exam swaps these nearly identical names
• The money-handling line that separates a futures commission merchant (FCM), which holds customer funds, from an introducing broker (IB), which clears through an FCM instead
• The difference between a commodity pool operator (CPO), which pools investor funds, and a commodity trading advisor (CTA), which advises others for compensation but does not pool money
• How basis is defined as cash (spot) price minus futures price for hedging questions, and why this is unrelated to the basis grade used in delivery provisions
• What carrying charges (storage, insurance, financing) do to a normal market, and how contango (distant months higher than nearby) differs from discount markets
• Why novation by the clearinghouse guarantees performance on a standardized, exchange-traded futures contract, unlike a private, customized, over-the-counter (OTC) forward contract
• When the short position holder controls delivery timing via first notice day, and why churning requires control of the account, not merely high trading volume