Discussion in 'Professional Trading' started by HiddenAgenda, Jun 29, 2009.

  1. Hi everyone,

    I've been day trading successfully for some time now. I'm thinking about incorporating. I mean I think this should take my business from a more boutique to a more sophisticated type of approach. Some of my friends are considering investing with me.

    The question I have is whether this should be an LLP or an LLC? How high are the registration costs? I really don't want lawyers and accountants to bite into my profits.

    I'm just wondering whether an LLC may be cheaper than an LLP. Have any of you guys looked at this at all?

    I mean I'm, more than anything, interested in a hands-off approach, to spend as little of my time as possible on formalities, to really focus on my trading, and developing my strategies.

    I'm currently working with a programmer, where basically I'm developing the core logic for the trading system, and he turns it into code. Would I have to hire him, if we incorporate?

    Any advice or sharing of experience is appreciated!
  2. RDPoS


    I have been looking into this myself and make no claims that the information I have thus far is correct, but my understanding is that if you are trading and want to form a partnership, all partners must materially contribute (read not be just investors, your programmer would materially contribute) in order for it to pass legal muster. When you start taking on outside investors you are subject to excessive government regulation. There are exemptions for "Commodity Pool Operators" (CFTC Rule 4.13(a)(4)).

    Furthermore, "The investment manager qualifies for the exemption under CFTC rule 4.13(a)(4) on the basis that, among other things, (I) each shareholder is either (A) a natural person, who is a “qualified eligible person” as defined in CFTC rule 4.7(a)(2) or (B) a non-natural person that is either an “accredited investor” as defined under the U.S. securities and exchange commission rules or a “qualified eligible person” as defined under CFTC Rule 4.7; and (II) share in the fund are exempt from registration under the U.S. Securities Act of 1933, as amended, and offered and sold without marketing to the public in the U.S., and but that is only valid for "qualified investors" and "natural persons"

    Qualified eligible persons start at net worth of $1M.

    Please feel free to agree/disagree or correct any factual conclusions I may have drawn.