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Compliance Framework — QGTM.AI

DISCLAIMER: This document outlines compliance considerations. It is NOT legal advice. All regulatory determinations must be reviewed by qualified securities counsel before launch.

Regulatory Landscape

CFTC / NFA — Commodity Trading Advisor (CTA)

Key question: Does QGTM.AI need to register as a CTA?

A CTA is anyone who, for compensation, advises others on commodity futures or options trading. Since commodity ETFs are securities (not futures), CTA registration may not apply to ETF-only signals. However:

  • Some commodity ETFs hold futures contracts (USO, UNG, DBA) — signals on these may trigger CTA obligations
  • The CFTC has broadened its interpretation of "commodity interest"
  • NFA registration may be required if providing advice on futures-based ETFs for compensation

Exemptions to evaluate with counsel: - Section 4m(1) of the Commodity Exchange Act — fewer than 15 clients in trailing 12 months - Rule 4.14(a)(8) — registration exemption for advisors whose commodity interest advice is incidental

SEC — Investment Adviser

Publishing signals for compensation on securities (ETFs) likely triggers Investment Advisers Act of 1940.

Exemptions to evaluate: - Publisher's exclusion (Section 202(a)(11)(D)) — if signals are of general and regular circulation, not personalized - De minimis exemption — fewer than 15 clients, no holding out as adviser - State registration may be required even if SEC-exempt

State Blue Sky Laws

  • Broker-dealer implications if executing on behalf of subscribers
  • State-level investment adviser registration requirements vary
  • Signal publication may be treated differently by state

SEC Marketing Rule (Rule 206(4)-1)

If registered as an adviser: - All performance advertising must be honest and not misleading - Hypothetical performance must include prominent disclosures - No cherry-picked time periods - Gross and net performance must be shown - Third-party ratings require specific disclosures

Required Disclosures

Risk Disclosures (all tiers)

Every signal and every subscriber-facing page must include:

  1. "Past performance is not indicative of future results"
  2. "Trading commodity ETFs involves substantial risk of loss"
  3. "Leveraged and inverse ETFs carry additional risks including daily reset decay"
  4. "Signals are generated by algorithmic models which may fail in unprecedented market conditions"
  5. "QGTM.AI is not a registered investment adviser or commodity trading advisor" (until/unless registered)
  6. "This is not personalized investment advice"

Specific ETF Disclosures

  • K-1 ETFs (USO, UNG, DBA, etc.): Tax implications of partnership structure
  • Leveraged/Inverse ETFs (UCO, SCO, BOIL, KOLD): Daily reset decay, not suitable for long holding periods
  • ETN risks (JJC, JJN, JO, NIB, COW, BAL): Issuer credit risk

Operational Compliance

Signal Integrity

  1. Append-only signal log — every signal cryptographically hashed and timestamped
  2. No retroactive modification — published signals cannot be altered
  3. Transparent track record — all signals, including losers, publicly verifiable
  4. Timing barriers — proprietary book fills before subscriber signals, with auditable delay

Data Handling

  1. Subscriber PII minimized (email + billing only, via Stripe)
  2. GDPR compliance for EU subscribers (data export, deletion rights)
  3. CAN-SPAM compliance for email signals
  4. No selling subscriber data to third parties

Terms of Service

Must include: - Service description and limitations - No guarantee of returns - Subscriber eligibility (accredited investor requirement TBD by counsel) - Refund policy - Liability limitations - Dispute resolution (arbitration clause TBD)

  • [ ] Engage securities counsel for regulatory determination
  • [ ] CTA registration analysis (futures-based ETF signals)
  • [ ] Investment adviser registration analysis (ETF signals for compensation)
  • [ ] State BD/IA registration requirements by target states
  • [ ] Terms of Service drafted and reviewed
  • [ ] Privacy Policy drafted and reviewed
  • [ ] Risk disclosures finalized
  • [ ] Marketing materials reviewed for compliance
  • [ ] Signal logging and audit trail verified
  • [ ] Insurance (E&O, cyber) evaluated

Flag for Deploy Runbook

DO NOT launch the subscription business until the legal checklist above is complete. This is documented in the deploy runbook as a mandatory pre-launch gate.