Trading Activities

9 Months Ended

Sep. 30, 2017

5.	Trading Activities:

The Partnership’s objective is to profit from speculative trading in Futures Interests. Therefore, the Trading Advisors for the Partnership will take speculative positions in Futures Interests where they feel the best profit opportunities exist for their trading strategies. As such, the average number of contracts outstanding in absolute quantities (the total of the open long and open short positions) has been presented as a part of the volume disclosure, as position direction is not an indicative factor in such volume disclosures.

All of the Futures Interests owned by the Partnership are held for trading purposes. The monthly average number of futures contracts traded during the three months ended September 30, 2017 and 2016 were 2,476 and 3,351, respectively. The monthly average number of futures contracts traded during the nine months ended September 30, 2017 and 2016 were 2,850 and 2,968, respectively. The monthly average number of metal forward contracts traded during the three months ended September 30, 2017 and 2016 were 109 and 322, respectively. The monthly average number of metal forward contracts traded during the nine months ended September 30, 2017 and 2016 were 154 and 439, respectively. The monthly average notional values of currency forward contracts traded during the three months ended September 30, 2017 and 2016 were $120,662,532 and $243,384,213, respectively. The monthly average notional values of currency forward contracts traded during the nine months ended September 30, 2017 and 2016 were $129,552,635 and $338,750,713, respectively.

The following tables summarize the gross and net amounts recognized relating to the assets and liabilities of the Partnership’s derivatives and their offsetting subject to master netting agreements or similar agreements as of September 30, 2017 and December 31, 2016, respectively.


				Gross Amounts			Amounts			Gross Amounts Not Offset in the
				Offset in the			Presented in the			Statements of Financial Condition
				Statements of			Statements of					Cash Collateral
	Gross Amounts			Financial			Financial			Financial		Received/
September 30, 2017	Recognized			Condition			Condition			Instruments		Pledged*		Net Amount
Assets
Futures	$	960,084		$	(756,608	)	$	203,476		$	-	$	-	$	203,476
Forwards		328,109			(328,109	)		-			-		-		-

Total assets	$	1,288,193		$	(1,084,717	)	$	203,476		$	-	$	-	$	203,476


Liabilities
Futures	$	(756,608	)	$	756,608		$	-		$	-	$	-	$	-
Forwards		(745,702	)		328,109			(417,593	)		-		-		(417,593	)

Total liabilities	$	(1,502,310	)	$	1,084,717		$	(417,593	)	$	-	$	-	$	(417,593	)

Net fair value														$	(214,117	) *


				Gross Amounts			Amounts			Gross Amounts Not Offset in the
				Offset in the			Presented in the			Statements of Financial Condition
				Statements of			Statements of					Cash Collateral
	Gross Amounts			Financial			Financial			Financial		Received/
December 31, 2016	Recognized			Condition			Condition			Instruments		Pledged*		Net Amount
Assets
Futures	$	1,051,049		$	(756,615	)	$	294,434		$	-	$	-	$	294,434
Forwards		665,811			(665,811	)		-			-		-		-

Total assets	$	1,716,860		$	(1,422,426	)	$	294,434		$	-	$	-	$	294,434


Liabilities
Futures	$	(756,615	)	$	756,615		$	-		$	-	$	-	$	-
Forwards		(730,361	)		665,811			(64,550	)		-		-		(64,550	)

Total liabilities	$	(1,486,976	)	$	1,422,426		$	(64,550	)	$	-	$	-	$	(64,550	)

Net fair value														$	229,884	*

In the event of default by the Partnership, MS&Co., the Partnership’s commodity futures broker and the sole counterparty to the Partnership’s non-exchange traded contracts, as applicable, has the right to offset the Partnership’s obligation with the Partnership’s cash and/or U.S. Treasury bills held by MS&Co., thereby minimizing MS&Co.’s risk of loss. In certain instances, MS&Co. may not post collateral and as such, in the event of default by MS&Co., the Partnership is exposed to the amount shown in the Statements of Financial Condition. In the case of exchange-traded contracts, the Partnership’s exposure to counterparty risk may be reduced since the exchange’s clearinghouse interposes its credit between buyer and seller and the clearinghouse’s guarantee funds may be available in the event of a default.

The following tables indicate the gross fair values of derivative instruments of futures and forward contracts held by the Partnership as separate assets and liabilities as of September 30, 2017 and December 31, 2016, respectively.


	September 30, 2017
Assets
Futures Contracts
Commodity	$	244,827
Equity		575,558
Currencies		34,777
Interest rates		104,922


Total unrealized appreciation on open futures contracts		960,084


Liabilities
Futures Contracts
Commodity		(163,606	)
Equity		(40,526	)
Currencies		(62,361	)
Interest rates		(490,115	)


Total unrealized depreciation on open futures contracts		(756,608	)


Net unrealized appreciation on open futures contracts	$	203,476		*


Assets
Forward Contracts
Commodity	$	20,068
Currencies		308,041

Total unrealized appreciation on open forward contracts		328,109


Liabilities
Forward Contracts
Commodity		(149,043	)
Currencies		(596,659	)

Total unrealized depreciation on open forward contracts		(745,702	)


Net unrealized depreciation on open forward contracts	$	(417,593	)	**

*	This amount is in “Net unrealized appreciation on open futures contracts” in the Partnership’s Statements of Financial Condition.

**	This amount is in “Net unrealized depreciation on open forward contracts” in the Partnership’s Statements of Financial Condition.


	December 31, 2016
Assets
Futures Contracts
Commodity	$	323,692
Equity		348,618
Currencies		24,345
Interest rates		354,394


Total unrealized appreciation on open futures contracts		1,051,049


Liabilities
Futures Contracts
Commodity		(226,494	)
Equity		(140,355	)
Currencies		(144,708	)
Interest rates		(245,058	)

Total unrealized depreciation on open futures contracts		(756,615	)


Net unrealized appreciation on open futures contracts	$	294,434		*


Assets
Forward Contracts
Commodity	$	58,919
Currencies		606,892

Total unrealized appreciation on open forward contracts		665,811


Liabilities
Forward Contracts
Commodity		(293,032	)
Currencies		(437,329	)

Total unrealized depreciation on open forward contracts		(730,361	)


Net unrealized depreciation on open forward contracts	$	(64,550	)	**

*	This amount is in “Net unrealized appreciation on open futures contracts” in the Partnership’s Statements of Financial Condition.

**	This amount is in “Net unrealized depreciation on open forward contracts” in the Partnership’s Statements of Financial Condition.

The following tables indicate the Partnership’s trading gains and losses, by market sector, on derivative instruments for the three and nine months ended September 30, 2017 and 2016, respectively.


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
Sector	2017				2016				2017				2016
Commodity	$	(489,643	)		$	(309,812	)		$	(1,233,722	)		$	(2,292,488	)
Equity		(630,368	)			2,292,862				2,958,539				1,190,407
Currencies		(91,296	)			(38,341	)			(1,328,604	)			(909,404	)
Interest rates		(93,530	)			(626,574	)			(1,490,185	)			3,491,341

Total	$	(1,304,837	)	*	$	1,318,135		*	$	(1,093,972	)	*	$	1,479,856		*

*	This amount is in “Total trading results” in the Partnership’s Statements of Income and Expenses.

MORGAN STANLEY SMITH BARNEY SPECTRUM TECHNICAL LP 10-Q