Question on CTA registration needs...

Discussion in 'Professional Trading' started by BJL, Mar 16, 2007.

  1. BJL


    Hi all, new to this board. Seems like to right place to ask my question...

    I have been offered the chance to offer my services as a CTA for a European firm that allows Europeans to invest in CTA's via a fund structure (direct investment is not permitted over here).

    Basically the fund will collect money from investors and give my a limited power of attorney to trade the fund's money. Both the fund and all it's clients are non US.

    My question now is, do I need to register as a CTA, do I need to register with the NFA, do I need to request and exemption for registration as CTA?

    And if I don't need to register can I still call myself a CTA in Europe or would that be against regulations?
  2. Aaron


    First of all, legal advice on ET is worth what you pay for it.

    Secondly, I wouldn't think you'd have to register as a US CTA if you have no US clients. You could check with the NFA to be sure.

    I don't know if "CTA" is trademarked or whatever like "CFA" is. I always call myself a "registered CTA", so I guess you would be an "unregistered CTA". :) But to just go ahead and call yourself a CTA from the US would probably mislead people into thinking you are registered, and I'm sure you don't want to mislead people.

    Aaron Schindler
    Schindler Trading
  3. dabao91


    Hi BJL

    Where are you? Are you in US or out site of US?
  4. Aaron I'll tell ya', I'd register if I was him. Especially if he's American. I'm quite sure one can be prosecuted under American law even if the clients and enity are off shore.

    I know the Fed's have arrested Americans operating boiler rooms off shore (targeting Carribean citizens for instance) even though they committed no crime on U.S. soil.

    A properly registered disclosure document is your best line of defense in the event of losses.
  5. BJL


    I'm a Dutchman living in the Netherlands. The arrangement is compliant with local regulations.

    I'd register if only I didn't have to go abroad to take the tests and could figure out a way where to get my fingerprints :)
  6. BJL


    Yes, I think it is probably best if I contacted the NFA to get their opinion. Thanks Aaron.
  7. Aaron


    If you do, please let us know what you find out.
  8. if your clients are foreign and you have a discretionary trading privilege filed with the clearing firm. you dont have to be a cta as long as you do not participate in sharing commissions and you bill the clients direct for your services.

    the catch is that members can not do business with non members. you are a non member so the broker can not pay you anything, the client has to pay you. the broker gets the commissions and will not debit the account of the customer to pay you because you are not a member.

    if you get your cta and nfa membership both you can automatically each month have the broker debit the customers account for your fees and or share in commissions if the disclosure document discloses that relationship.

    but what do i know? he he.

  9. BJL


    Okay, answer I got from NFA was that :

    "When an individual or entity located outside the U.S. solicits only non-U.S. customers, regardless of whether the individual or entity places trades at U.S. markets, based solely on the location of the individual or entity and the location of the customers, the individual or entity is not required to register with the CFTC. "


    "Only the CFTC is authorized to interpret the CEA and the CFTC Regulations. Therefore, to determine whether you would qualify for an exemption from CFTC registration, please contact the CFTC."


    "If the CFTC determines that you are not required to register as a CTA, you may need to file a notification of exemption with NFA. These filing requirements are explained in CFTC Regulation 4.14."
  10. dabao91



    so do you plan to become a registered CTA? or otherwiese?
    #10     Mar 19, 2007