If its a managed account its actually easy.
No qualification needed, and no need to notify regulators under a certain amount.
The minute you start pooling funds it gets much harder.
But with a PAMM acccount the hardest part is you will need to set up a ltd company.
You did need to get a client to sign an affadavit though - which are actually readily available on some.broker sites
Oh also no outward advertising
If you want to go down the pooled fund route better set up a small incubator first.
A fraction of the cost of a hedge fund but still expensive
This will give you an audited track record.
Only after about 3yrs of that could you look to go full on hedgie.
My advice is managed money route, and i suspect any broker who offers Pamm or Lamm can guide you.
Well there you go !
Why donāt you spend Ā£30 on a Ltd Co, take on sharehilders at whatever rate they want to foolishly give you their money and simply trade It ?
Well I will be using my money plus there money then keep some of thereās and they will take the rest
Falstaff
Foolishly? Are you trying to imply something?
Emerald - arent you talking specifically about funds?
If its separated accounts isnt the process much simpler?
It was the last time i knew about it.
Can I trade my friends money in my account?
You can do what you want - provided your friend has trust.
The whole managed account thing is a good business model because at no time has the trader access to the clients money, only to the trading decisions.
Imo mixing up of money is all a bit messy
Is there not legalityās of this tho
Cdawg569 not quite sure what you mean but i take a guess.
There is nothing wrong with managing money on behalf of someone else - if you both agree to it. And they sign an affadavit.
But like I have said it is very difficult if you want to start a fund with many peoples money.
The regulators arent so much worried about them losing money, more that you could run off with their funds.
Thats why it is much simpler with managed accounts where the trader really only gets access to place the trades on behalf of the client - if there are multiple clients it is best through Lamm or Pamm software - which many brokers will provide
But most if not all brokers will need you to have limited liability before you get a PAMM account.
Also you are not allowed to advertise your services.
And I do believe over a certain amount managed you must notify the regulators
There are no special licences needed - at least in UK.
There is I believe a very simple FX broker qualification that may be worth taking.
Note - the laws may well have changed - I am no lawyer - so dont take my word on anything.
Also I do think maybe this is harder to do the US, certainly in Uk are laws for this type of thing are more relaxed.
Thank you very helpfulšš»
Hi John,
Any idea if the same rules apply to managing friends and families money in trading stocks and options?
Iām just looking to be pointed in the right direction. As Iāve heard elsewhere that there are regulations when it comes to handling non-HNW individuals.
Iāve also heard that creating a hedge fund structured as a partnership in the Cayman islands is a popular choice.
Cheers!
Hmm not sure - I know in the UK you can set up an investment club which I think has some limited liability - Iām assuming if your using options your from US right?
Maybe itās similar there?
Setting up a hedge fund is very expensive and probably not suitable - however for traders wanting to get an audited track record while at the same time managing close friends or families money I believe you can set up an incubator fund - less costly but still not cheap.
The managed accounts option is the lowest cost approach with fewest hurdles though
Iām from the U.K., but trade US stock options, (unfortunately our stock options have almost zero liquidity).
It seems the legal part is more complicated than the actual trading. The hedge fund route is unrealistic at this early stage due to the costs. To your point I think incubator fund/ investment club is the best choice. Iād just need to do some more research.
Thanks for your help
HI,
Iām in the UK and I was planning to start my own fund that is made up of family and close friends. I have a successful trading strategy and the business plan is, whatever profit I make in a month I take a 30% cut and the clients take a 70% cut. My question is, do I have to be regulated to do this if so how to I get regulated? Also, with all profits made who is responsible for paying the tax?
I would really appreciative if anyone replies and and more that happy to share my contact details for further decussion.
So has anyone deciphered an appropriate answer?
I will give my situation and what I have understood from reading this tread;
I have a high risk high reward strategy I have been working on for years.
I have turned it into a bot/EA.
I have the bot/EA trading my own money in my own account.
Friends and family have seen the results and want to āget in on itā.
I was going to offer a trade copier from my account to theirs, so they are in control of their money and their account but the botās trades are copied on to their accounts.
I would ask for a commission at the end of the month and trust they would pay me the commissions.
As itās all trust and friends ; they would need to trust my bot can trade well, and I would need to trust them to pay me.
I have warned there is a risk of complete loss and they understand that.
Is this legal in the uk?
If all parties know the risks and still agree, does there need to be anything more done/said?
Is it just a gentlemanās agreement? Does it need to be in writing too (affadavit ?)
Do I need to be a limited company or can I be just a sole trader?
Any help would be great, thanks.
Hi guys, I have an FTMO account and have set up an LLC for tax purposes, what are the rules regarding being regulated for this?
Hi John,
Iām looking to manage client accounts (mostly friends) I want to be completely above board and legal, I am based in the UK also.
I trade Forex and was wondering if you were able to clear up a couple questions I have;
How come we are not allowed to advertise our services?
What is the account size before I must notify regulators
Could you drop in the link to this broker Qualification please?
Thanks,
Will