Pondering whether or not to even consider managing a non-exempt CPO. Aside from the funding, these are my main concerns: I do not want to miss out on any trading opportunities while commuting to an office, thus I'd prefer to trade from home if it doesn't violate any CPO regulations. I also wouldn't want an employee in my residence. Is it legal to run a CPO out of one's home without a compliance officer?
usdjpy, Start your reading here https://www.nfa.futures.org/NFA-compliance/NFA-commodity-pool-operators/index.HTML Most CTA/CPO's are going to be single owner operators in the beginning. It is up to you to stay compliant. There are operations like http://www.turnkeytradingpartners.com/ that can help you navigate the rules and procedures. They also can provide back office type services to help you stay on the right side of the NFA rules. Are you sure you want to operate as a CPO? There are pros and cons to each classification, but I feel that operating as a CTA is better in many respects.
Thanks for the response wildbill. I will remember to reference those links when the time comes. As I recall the advantage of a CTA over a CPO is that the regulatory fees are cheaper (haven't looked at this recently) whereas having one single trading strategy with a CPO makes trade execution more efficient.
You really need to start looking at the big picture, not minor costs. Do you want to run a CTA business with managed accounts? Do you want to run a single fund as a CPO? CPOs have higher requirements because it is considered a security that you are selling, so you need to be register and have much more compliance and regulatory oversight. Can you get to scale, maybe $25mm very quickly? Then consider that in many cases, allocators and investors prefer SMA. I would start with a CTA business. Then when you get scale, see if starting a pooled investment fits your client base better. The cost of starting a CTA is very small when you consider a good food truck can cost you $75K. Do it right from the beginning. The CTA start up with your docs in place and a website should be $12K to $15K. Very inexpensive to start your own business.
In a CPO you are trading a "pool" of money in one account. In a CTA they are separate accounts that you have power of attorney to trade. Much cleaner and tidier in a lot of ways.
In regards to the compliance part of your question.... You wouldn't personally have a compliance officer, however the CCO or other compliance associates at the firm you're clearing would technically be the ones that will try to do their due diligence, and make sure that you're following NFA & CFTC regs. As mentioned above, the NFA site has a wealth of information on guidelines.