# When trading software has to register as an adviser

Why auto-trading and backtesting vendors say they are not a CTA or an investment adviser, which exclusions they rely on, and what that leaves the buyer with.

*https://stockmarketstack.com/guides/when-trading-software-must-register · background to No-Code Strategy Builders & Auto-Trading*

**Answer:** Selling advice on futures or securities for pay is a registered activity in the US, and the definitions are broad enough to reach software. Vendors stay outside them through exclusions: a CFTC rule for advisers who neither direct client accounts nor tailor advice to a client, and the Advisers Act carve-out for impersonal publications that the Supreme Court read in Lowe v. SEC. The disclaimer is the vendor describing which side it stands on.

## How it works

Two US regimes license people who advise others on trading for money, one for futures and one for
securities. Both define the regulated activity broadly enough to reach a product, not only a
person, and both then carve out exceptions. A trading-software vendor's disclaimer, the line that says
it "is not a registered investment adviser or commodity trading advisor", is a statement about which
side of those carve-outs it believes it stands on.

The definitions are the starting point.

**Futures.** The Commodity Exchange Act defines a
[commodity trading advisor](https://www.law.cornell.edu/uscode/text/7/1a) as any person who, "for
compensation or profit, engages in the business of advising others, either directly or through
publications, writings, or electronic media, as to the value of or the advisability of trading" in
futures, security futures, swaps and options on futures, or who "as part of a regular business, issues
or promulgates analyses or reports" on them. Electronic media are named in the statute.

**Securities.** The Investment Advisers Act defines an
[investment adviser](https://www.law.cornell.edu/uscode/text/15/80b-2) as "any person who, for
compensation, engages in the business of advising others, either directly or through publications or
writings, as to the value of securities or as to the advisability of investing in, purchasing, or
selling securities".

Read literally, a subscription that sends trade signals, or a builder that ships ready-made
strategies, could fit either. The question for a vendor is which exclusion takes it back out, and the
question for a buyer is what the product must avoid doing to stay there.

## The futures side: two lines in Rule 4.14

The statute itself excludes "the publisher or producer of any print or electronic data of general and
regular dissemination", but only where that service "is solely incidental to the conduct of their
business or profession". The CFTC's rules add exemptions from registration in
[17 CFR 4.14](https://www.law.cornell.edu/cfr/text/17/4.14). The one software vendors are built
around is paragraph (a)(9). A person is not required to register as a CTA if "it does not engage in
any of the following activities":

> (i) Directing client accounts; or
> (ii) Providing commodity trading advice based on, or tailored to, the commodity interest or cash
> market positions or other circumstances or characteristics of particular clients.

Both words carry definitions. [Rule 4.10](https://www.law.cornell.edu/cfr/text/17/4.10) says
*direct* "refers to agreements whereby a person is authorized to cause transactions to be effected for
a client's commodity interest account without the client's specific authorization". It defines a
*trading program* as one under which a person directs a client's account or "guides the client's
commodity interest trading by means of a systematic program that recommends specific transactions".

So the exemption describes a product that is the same for every customer and does not trade on
anyone's behalf without their specific authorisation. The rule text does not mention software, and it
does not say how specific an authorisation must be when an order is generated by a program the
customer switched on. That is the line automated products sit on, and it is a
question for the CFTC or counsel, not for a vendor's FAQ.

Rule 4.14 has other exemptions with different conditions. Paragraph (a)(10) covers a person who has
advised no more than 15 persons in the preceding 12 months and "does not hold itself out generally to
the public as a commodity trading advisor", a condition about marketing as much as about size.
Some exemptions require a notice filed through NFA's system; the (a)(8) exemption, for example, comes
with annual affirmation and record-keeping duties. Paragraph (a)(9) as printed has neither.

## The securities side: Lowe and the publisher's exclusion

The Advisers Act lists who is not an investment adviser. Exclusion (D) is "the publisher of any bona
fide newspaper, news magazine or business or financial publication of general and regular
circulation".

In [Lowe v. SEC](https://www.law.cornell.edu/supremecourt/text/472/181), decided on 10 June 1985, the
Supreme Court held that investment newsletters fell within it. Congress, the Court wrote, "was
primarily interested in regulating the business of rendering personalized investment advice", and
"did not seek to regulate the press through the licensing of nonpersonalized publishing activities".
It read "bona fide" as "genuine", meaning "disinterested commentary and analysis as opposed to
promotional material disseminated by a 'tout'", and "general and regular circulation" as excluding
"hit and run tipsters". The decisive passage sets the limit:

> As long as the communications between petitioners and their subscribers remain entirely impersonal
> and do not develop into the kind of fiduciary, person-to-person relationships … that are
> characteristic of investment adviser-client relationships, we believe the publications are, at
> least presumptively, within the exclusion.

The case was about printed newsletters, and it does not decide whether a given piece of software is a
publication. What it supplies is the test a vendor relying on the exclusion is invoking: the same
output for every subscriber, offered to the public on a regular basis, with no advice "attuned to any
specific portfolio or to any client's particular needs".

## Three shapes of product against the definitions

The definitions do not sort products by category, and this page does not place any named product on
either side. They sort by what the product does with your account and your circumstances, and most
products in this field take one of three shapes.

1. **Software that runs rules you wrote.** A backtester, a no-code builder, or a relay that turns your
   own alerts into orders, such as [TradersPost](https://stockmarketstack.com/tools/traderspost),
   [SignalStack](https://stockmarketstack.com/tools/signalstack) and [PickMyTrade](https://stockmarketstack.com/tools/pickmytrade). The vendor supplies the
   machinery and you supply the decision.
2. **Rules someone else wrote, delivered to everyone alike.** A template library, a published strategy
   or a signal feed sent to all subscribers. Impersonal, but it is advice about specific trades, and
   whether it is excluded turns on the conditions above: the same for everyone, genuine, regular, and
   in futures, not directing accounts.
3. **Anything tailored or discretionary.** A service that adjusts recommendations to your positions or
   goals, or trades your account without your specific authorisation. This is what both regimes'
   exclusions leave out, and what registration exists for.

A product can be more than one of these, for instance a builder with a marketplace of other users'
strategies beside it. Which part you use decides which shape you are in.

## What you can do about it

**Read the disclaimer as a claim about the activity.** "Not a registered investment adviser or CTA"
says the vendor believes an exclusion applies. Ask which one, and check that the product works the way
the exclusion requires: the same for every customer, and no trading on your behalf without your
specific authorisation.

**Look the firm up.** For futures, search the firm in NFA's
[BASIC](https://www.nfa.futures.org/basicnet/), a free tool that NFA describes as a way "to research
the background of derivatives industry professionals". For securities, use the SEC's
[Investor.gov lookup](https://www.investor.gov/introduction-investing/getting-started/working-investment-professional/check-out-your-investment-professional),
which sends you to Investment Adviser Public Disclosure to see whether a professional or firm "is
licensed with the SEC, with a state(s), and/or with FINRA" and any disciplinary history. A vendor
relying on an exclusion will usually have no record there, which is consistent with its claim, not
evidence against it.

**Notice who makes each decision.** If you write the rules, set the parameters and connect your own
broker, you are using a tool. If someone else's strategy places orders in your account, ask what you
authorised, how specifically, and what the provider's terms say it owes you when it goes wrong.

**Keep your own records of what you switched on.** A log of which strategy, which parameters and which
account, with dates, is your evidence of what you authorised. Check what the platform itself logs
before you rely on it; the products are listed in
[no-code strategy builders](https://stockmarketstack.com/categories/no-code-strategy-builders).

**Know what registration would and would not give you.** Registration brings a firm under a regulator
and puts its record in a public database. It does not make a strategy profitable, and its absence
does not make a tool unsafe. It changes what you can check, and who you can complain to.

This page describes the definitions and the cases that read them. Whether a particular product falls
inside them is a question for the regulator or a lawyer, not for a catalogue.

## Tools this bears on

- [TradersPost](https://stockmarketstack.com/tools/traderspost.md) — Turns TradingView and TrendSpider alerts into orders at your own broker, per account.
- [SignalStack](https://stockmarketstack.com/tools/signalstack.md) — Webhook-to-broker order routing, billed per order sent rather than per account.
- [PickMyTrade](https://stockmarketstack.com/tools/pickmytrade.md) — TradingView alerts to futures, prop-firm and IBKR accounts, for one flat fee per login.
- [Option Alpha](https://stockmarketstack.com/tools/option-alpha.md) — No-code bots for defined-risk options spreads, run in the cloud through your own broker.

## FAQ

### What is a CTA?

A commodity trading advisor, defined in the Commodity Exchange Act as a person who, for compensation or profit, advises others on the value or advisability of trading futures, options on futures or swaps, directly or through publications, writings or electronic media. CFTC Rule 4.14 lists the cases in which such a person is not required to register.

### Why do trading software vendors say they are not investment advisers?

Because the Advisers Act defines an investment adviser broadly, as anyone advising others on securities for compensation, including through publications. A vendor that says it is not one is relying on an exclusion, usually the one for bona fide publications of general and regular circulation, which the Supreme Court in Lowe v. SEC read as covering impersonal advice rather than advice tailored to a client.

### What does directing an account mean under CFTC rules?

CFTC Rule 4.10(f) defines it as an agreement under which a person is authorised to cause transactions in a client's commodity interest account without the client's specific authorisation. Rule 4.14(a)(9) exempts from registration an adviser who neither directs client accounts nor gives advice based on or tailored to particular clients' positions or circumstances.

### How do I check whether a firm is registered?

For futures, search the firm in NFA's BASIC, which NFA describes as a free tool to research the background of derivatives industry professionals. For securities, search Investment Adviser Public Disclosure, which the SEC's Investor.gov links to and which shows SEC and state registration and disciplinary history, redirecting to FINRA's BrokerCheck for broker-dealers.

### Does an unregistered vendor mean the software is unsafe?

No. Registration is a question about the activity, not the quality of the software. What it changes is what you can check and who supervises the firm. An unregistered vendor has no registration record to look up, and its obligations to you are the ones in its terms of service.

## Sources

1. [7 U.S. Code § 1a(12), Commodity trading advisor](https://www.law.cornell.edu/uscode/text/7/1a) — Legal Information Institute, Cornell Law School, read 2026-10-23
2. [17 CFR 4.14, Exemption from registration as a commodity trading advisor](https://www.law.cornell.edu/cfr/text/17/4.14) — Legal Information Institute, Cornell Law School, read 2026-10-23
3. [17 CFR 4.10, Definitions](https://www.law.cornell.edu/cfr/text/17/4.10) — Legal Information Institute, Cornell Law School, read 2026-10-23
4. [15 U.S. Code § 80b-2, Definitions (Investment Advisers Act of 1940, section 202)](https://www.law.cornell.edu/uscode/text/15/80b-2) — Legal Information Institute, Cornell Law School, read 2026-10-23
5. [Lowe v. Securities and Exchange Commission, 472 U.S. 181](https://www.law.cornell.edu/supremecourt/text/472/181) — Legal Information Institute, Cornell Law School, 1985-06-10. A Supreme Court opinion; the exclusion it construed, section 202(a)(11)(D), reads the same in the current Code.
6. [BASIC, Background Affiliation Status Information Center](https://www.nfa.futures.org/basicnet/) — National Futures Association, read 2026-10-23
7. [Check Out Your Investment Professional](https://www.investor.gov/introduction-investing/getting-started/working-investment-professional/check-out-your-investment-professional) — U.S. Securities and Exchange Commission (Investor.gov), read 2026-10-23

*Last updated 2026-10-23. A reference page, corrected in place — not a dated post.*