Material Conflict of Interest Statement
1. Clearing Firm Arrangements
GFF Brokers, Inc. maintains clearing agreements with multiple Futures Commission Merchants (FCMs). Because the terms of these agreements may vary — including commission rates, technology fees, and other financial arrangements — GFF may have a financial incentive to recommend one FCM over another. Clients should be aware that the clearing firm recommended by GFF may not always offer the lowest cost or the best execution for every situation.
2. Trading System Selection
GFF Brokers offers access to various automated and manual trading systems. Because GFF earns commission income on each trade executed, there may be an incentive to recommend or select trading systems that trade more frequently, thereby generating greater commission revenue for the firm. Clients should evaluate trading systems independently and consider whether the frequency of trades aligns with their own risk tolerance and investment objectives.
3. Proprietary Trading
Principals and associated persons of GFF Brokers may trade futures and options on futures in proprietary accounts. These accounts may be subject to lower commission rates than those charged to clients. Additionally, GFF principals and associated persons may, from time to time, take positions in the same markets as clients and may hold positions that are opposite to those held in client accounts. While GFF does not base its recommendations on its proprietary trading activity, this relationship presents a potential conflict of interest.
4. Volume Discounts and Incentive Programs
FCMs with which GFF maintains clearing relationships may offer volume-based discounts, rebates, or other incentive programs that financially benefit GFF. These arrangements may influence which FCM GFF recommends to clients. The existence of such programs creates a potential conflict of interest, as GFF may benefit financially from directing client business to a particular clearing firm.
5. Interest Income on Customer Balances
GFF Brokers may receive a portion of the interest income earned by the FCM on free credit balances held in customer accounts. This interest income is generated from uninvested cash in client accounts and may not be passed through to the client. The potential to earn interest income on customer balances presents a conflict of interest, as GFF may benefit from clients maintaining higher cash balances in their accounts.
6. Soft Dollar Arrangements
GFF Brokers is permitted to enter into soft dollar arrangements, whereby the firm may receive research, technology, or other services from brokers or third parties in exchange for directing client transactions to those entities. These arrangements may influence order routing decisions and present a conflict of interest, as the benefits received through soft dollar arrangements may not directly benefit the client.
7. Additional Registrations of Principals
Principals of GFF Brokers may hold additional registrations with other firms or regulatory bodies, which may require a portion of their time and attention. These outside business activities could limit the time and resources dedicated to GFF Brokers and its clients. Clients should be aware that the principals of the firm may have obligations to other entities that could present a conflict of interest.
8. Fee Sharing with Third-Party CTAs
GFF Brokers and its associated persons may enter into fee-sharing arrangements with third-party Commodity Trading Advisors (CTAs). Under these arrangements, GFF may receive a portion of the management or performance fees charged by the CTA to its clients. This creates a potential conflict of interest, as GFF may have a financial incentive to recommend or promote CTAs with which it has fee-sharing agreements over those with which it does not.