Easiest way is for someone else to act as the custodian. Someone like Millenium or RIA. Is MTrust a custodian? They would be another alternative.
You might want to hold off on getting the CTA until you've maxed out the number of accounts you can manage as Joe trader (15). Just setup an omnibus trading account with your broker and get the limited power of attorney to trade the account and you're in business. The nice thing is, if all goes well you can use the trading results in your disclosure document when you need to be a CTA. The series 3 is valid for 2 years after passing, so you can take it anytime. You'll also need 4 hours of ethics training within 6 months of getting your CTA.
Acrary, you wrote: " the number of accounts you can manage as Joe trader (15)." So, with the limited power of attorney, anyone can trade for someone else up to 15 accounts? Is there any type of designation needed to trade for someone this way? Also, can the accounts be pooled? One last one, can you explain breifly what an omnibus account is? thanks much
CTA exemption "Registration is required unless:" "a.) You have provided advice to 15 or fewer persons during the past 12 months and do not generally hold yourself out to the public as a CTA or" http://www.nfa.futures.org/registration/cta.html Pool exemption "In general, registration is required unless:" "a.) The total gross capital contributions to all pools are less than $200,000 and" "b.) There are no more than 15 participants in any one pool." http://www.nfa.futures.org/registration/cpo.html
No, get it... It would add crudentiality to the firm. Let's say you see a 30% Annual performing firm. One's CTA, one's Joe Trader. Which would you pick to invest in?
So, with the limited power of attorney, anyone can trade for someone else up to 15 accounts? Yes, no limits on account size....but you can't advertise (like a junior hedgefund) Is there any type of designation needed to trade for someone this way? No, you just need to have the authority to trade the accounts from each person. Also, can the accounts be pooled? I don't know the answer to this. Maybe when you see my reply to the omnibus question, it won't be an issue. One last one, can you explain breifly what an omnibus account is? A client omnibus account is a single account that represents a collection of other accounts. If you and three friends want to trade but only you will be the trader of their accounts, an omnibus account is the way to go. Each of you sets up a account at your broker. Then you request an omnibus account from your broker. You provide your account # and those of your friends. A new unique account # will be created and the account balance will be the total of your account + your friends accounts. Now you place a trade for 4 emini's. The trade will be allocated 1 to you and 1 each to your friends. If you don't want that, you call the broker by the end of the day and say "that losing trade of 4 emini's goes to my account", because you're a nice guy. Then the broker changes the allocation so that only your account gets dinged. The nice thing is you're only trading once for all accounts and everybody can check their own P/L by logging into their separate accounts. The other nice thing is the omnibus account is cross margined "If you have 100k in your account and your friend only has $500 in his account you can still allocate a trade to it because the margin is calculated against the total of the omnibus account - not individuals". Once your buddy tells his friend how great you are all he has to do is setup a acount with the broker and sign the limited power of attorney and you can add the new guy to the omnibus account. No hassle. Also, as your broker sees you doing well, he can recommend you to a client and have you setup to trade the new account quickly. While you're doing the trading, you can get your series 3, develop a disclosure document, setup your bookeeping, and develop your website offline. If you want to become a CTA at any time all you do is submit the paperwork and you're done. If you do become a CTA, look for a good attorney and a good CPA. You'll need both of them. The only paperwork that I know of is your broker must submit a form to the CFTC indicating that you're trading a omnibus account.
acrary, JayS, etc. Do you believe it would be possible to charge fees with the omnibus account and without registering as a CTA? I assume it is, but I am sure that changes things regarding taxes and may require the formation of an LLC or the like. thanks in advance