Compliance/Selling Away Question

Discussion in 'Professional Trading' started by lowhigh27, Jun 28, 2011.

  1. Can I be registered with a broker/dealer/RIA and still trade with an outfit like Avatar?

    A little background:

    After leaving my last prop firm, my Dad managed to talk me in to helping him out with his investment management practice instead of joining another prop firm(he's been in it for 30 years but is getting older and needs someone to lighten his workload of 80+hours a week) so I registered with his broker/dealer/RIA and am doing that part time now-mostly helping him with marketing and client support right now.

    However, I really miss day trading, and I have been looking at some other firms for remote trading. Mainly, CY group and Avatar. I have spoken with both of them and neither has been able to answer my question above.

    Ultimately I will have to speak with my broker dealer about it, and it is my understanding they have the right to flat out tell me I can't do it. Before I go to them, though, I would like to be armed with a little more information. Is there any compliance pro here, or anyone who has experienced this sort of thing that could shed some light? Currently Avatar does not require registration, fyi.
  2. My experience was that compliance does not like anything done at another firm. Your situation is unique, so maybe they will cut you some slack but I have not found compliance people to be very forgiving.

    If your dad is independent, maybe it will be a little easier to get the ok vs. a wirehouse. See if your dad can try ask before you decide - he doesn't have to give compliance your name directly, just that a potential new hire has the following questions.

    You can choose to inform them in advance and try to get the ok... or as they say - it's easier to ask forgiveness than permission... Just assume compliance will not be happy w/ any accounts being held/traded outside firm name. At my previous employer, any trades I did that could not be done at the firm had to be reported. Each and every one. I was swing trading options then, so not a big deal, but day trading would be a nightmare - if not impossible.
  3. rmorse

    rmorse ET Sponsor

    Most broker dealers do not allow dual registration. If your current broker dealer allows you, you can open a customer portfolio margin account with a firm like mine, and they would get copies of your monthly statements. That way you can trade with good leverage and not have any regulatory issues.

    You current firm must allow the account, and you'll need the assets required for portfolio margin. PM me with your contact information if you have any questions.
  4. The problem... your sponsoring BD has "supervisory responsibility" over you and can be held accountable for your actions where money is involved.. even if it's your own... even if you did something your BD didn't know about... because they are SUPPOSED to know. That's why any BD will be hesitant to allow "outside" activity.
  5. He is independent, but I'm not sure how much that will help. At least he knows the head compliance guy pretty well, but still...

    Since this is my dad's business I don't consider it an option to just do it and ask forgiveness when they find out. I would never put his practice at risk, or even risk him looking like he doesn't have his house in order.
  6. By going with a firm like Avatar I would avoid the dual registration problem.

    I don't really have the assets required to trade freely with a retail margin account(never let a woman find out how much you make)
  7. Yeah, I don't know how much difference there is in an independent shop vs a wirehouse in today's environment.

    Sounds like you know who to contact and what to ask then. Pretty cut and dry. Just expect to be turned down immediately and it might require a few tries to get something approved - but don't expect it to be what you wanted. Like I said, I got options trading approved that my firm did not do, but every single trade - open and close of a trade - had to be notified in writing to compliance. I know they viewed this as a PITA and really 'suggested' that I don't bother with this.

    Maybe a coincidence but I wasn't at the firm too much longer after that...

  8. This is a situation where written responses are required from all parties involved.

    I doubt very seriously if they will allow you to do this. I can remember when I approached my old bd about joining covestor, and they denied the dual registration. Certainly I would expect an identical response.

    There is a significant difference between wirehouse and independents, mainly the method by which client custody of funds and allowable investment menus are handled.
  9. Once again, not seeking dual registration.

    I realize the difference between the types of BD's, I just doubt being independent would really help me in this case. If anything it would probably hurt my chances, since we handle our investments in house and have a more active management approach than any wirehouse firm I've ever heard of. I'm guessing they will see way too much risk for "intermingling","front running", etc. Even though I'm not the one making the trades for us.

    Merely wanting to know if anyone has ever pulled it off and how.
  10. Eventually I did manage to get dually registered with Covestor. The catch is it was when I became self-employed at my own RIA and CTA.

    Do you really find some advantage with Avatar? I find a lot of off the shelf technology is reasonably similar to what you'd have available at your average retail brokerage account or futures account.

    I'd actually recommend multicharts very highly, and I think at IB you'll have an even better chance of best execution.

    I don't think it's the front running they'd have a problem with but rather the conflict of interest created between the two employers. It does seem obvious, though, to me, that it is for your own personal trading rather than for other clients. I still think they will not allow this.
    #10     Jun 29, 2011