Without being a CTA? I currently have no licenses and do not want to get them or become a CTA but would like to manage a few "friends" accounts and charge them 1% of assets and 20% of gains. Is this possible in NY state?
Commodity Trading Advisor (CTA) A CTA is an individual or organization which, for compensation or profit, advises others as to the value of or the advisability of buying or selling futures contracts, options on futures, retail off-exchange forex contracts or swaps. Providing advice includes exercising trading authority over a customer's account as well as giving advice based upon knowledge of or tailored to customer's particular commodity interest account, particular commodity interest trading activity, or other similar types of information. Registration is required unless: 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 You are in one of a number of businesses or professions listed in the Commodity Exchange Act or are registered in another capacity and your advice is solely incidental to your principal business or profession or You are providing advice that is not based upon knowledge of or tailored to customer's particular commodity interest account, particular commodity interest trading activity, or other similar types of information, such as, for example You make recommendations, such as advice to buy or sell specific futures contracts should a particular price level be reached, through newsletters, books and periodicals. The advice includes specific recommendations and the recipients of publications all receive the same advice or You provide specific advice through e-mails, facsimiles, an Internet web site, telephone calls or face-to-face meetings with customers consisting of instructions to buy or sell a futures contract based on a computerized trading system, which also is available for purchase and use on a personal computer, and the customers all receive the same advice or You conduct seminars at which you teach attendees how to trade commodity futures contracts aided by a software program that you sell and you invite seminar attendees to participate in a question-and-answer session at which you provide commodity trading advice without asking or receiving information about the personal characteristics of the attendees. All registered CTAs who manage or exercise discretion over customer accounts must be Members of NFA in order to conduct futures business with the public.
Is this information valid for someone who trades stocks and/or options for a friend? I guess the real question is does one have to be a CTA if he doesn't get anywhere near futures?
Check out IB's friends and family account. It simply requires POA. Some states do NOT let you charge a performance fee unless they are a "qualified investor" which is usually defined as one million liquid net work and 200k in net income the last 3 consecutive years. Otherwise you can only charge a management fee and some states cap that at 3%. There is also a limit on capital in every state on how much you can manage if you are not registered. Each state is different.
Something to note is the limit on investor/customers before you have to register as a professional (RIA/CTA/CPO) While the IBKR limit is 15, each state has its own limits. I was surprised to see a limit of 5 in Illinois when we have a lot of Chicago traders using this format. Would my IRA's fall under the customer limit?