You must have known who or what brokers are and right now let’s start talking about one of the type of broker. Yes, it is true that there are a lot of types of broker and one of them is commodity broker. So what makes one broker is different from other brokers. What make them different is actually the good that they are trading and commodity broker is a broker who is buying and selling good. Just like other brokers, a commodity broker could stand individually or they could join a kind of broker firm. Most of them are trading on the behalf of clients that is why they are called as brokers because if they are trading based on their own wills then they will be called as traders.

Before, continue talking about a commodity broker who is selling and buying commodity contract is better for you to find out more information first about what kind of commodities that are traded as the part of commodity contract. Commodity contract is carried out in commodity exchange market and what that are traded like agriculture products and raw materials, for example is coffee, milk, cocoa, cotton, wheat and so on. Who carries out this kind of contract? Have you been familiar with the term of future contract? It is actually one of the types of contract that mostly used by traders; it is a kind of contract where a commodity broker on the behalf of a company is purchasing commodity from a farmer who even would not harvest the commodity in several months. So, what is the benefit of doing this kind of contract? Well, there is a kind of win-win solution for both company and farmer in this matter, a company could make sure that the price for the commodity will not change when the harvest season is coming and at the same time this contract will protect the farmer from price drop because in harvest season commodity price can be very unstable. Besides, future contract there is also option and others financial instruments that similar to financial derivatives.

Moreover, delete there are some types of commodity broker. Floor Brokers or Traders are those individuals or firms who trade commodity contract on the behalf of the clients or based on their own wills and the trading is carried out via open outcry. Future Commission Merchant or FCM is not only accepting the commodity contract but they are also holding their clients funds for margin. Introducing Broker or IB mostly associates with the FCM and Foreign Introduction Broker or FIB is cooperating with IB and FCM in order to execute exchange within US Commodity Trading Advisor or CTA.

Those who are providing advices to clients in order to execute the commodity exchange and Commodity Pool Operator or CPO will take place as the operator to whatever advices suggested by CTA. And the last is Registered Commodity Representative or Associated Person are those who will conduct the activities of FCM, IB, FIB, CTA and CPO.

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