What does Eligible Commercial Entity mean?
A commercial entity approved by the CFTC that fulfills the requirements to trade in contract market or become eligible contract participants. The entity may be a dealer for hedging, trading or may even want to act only as a market maker for such contacts.
Futures Knowledge Explains Eligible Commercial Entity
An Eligible Commercial Entity needs to fulfill few requirements such as ability to make or take delivery of an underlying commodity or incur risks related to the commodity. A dealer, a financial institution or an insurance company that provides risk management, hedging services, and other market-making activities can also be registered with CFTC as an Eligible Commercial Entity. Such organizations have specialized know how and risk mitigation framework to trade in commodities.