Trading for pros only

Discussion in 'Professional Trading' started by NYSEtradinglog, Jan 22, 2004.

  1. Trading for pros only.

    Hi everybody

    I have a question.

    Lets say, there is a firm or person that
    is trading for business pros only. That means registered Investmentadvisors,
    registered HedgeFunds, CPO's, CTA's and so on.

    Here in Europe if you are trading for Pros only you don't have to register
    Whith the local authority.

    Based on:
    In Germany it is WpHG § Absatz 9(2).
    and in Austria it is WAG §19 Absatz 2a.

    Does anybody know if there is a simmilar law for the US or UK?

    Thanks for all information on this topic.
  2. the way i understand it is that you don't have to be licensed to trade period. it is a requirement of the firm not the government. for instance, a trader for a hedge fund does not need a series 7 unless, of course, the firm requires it.


    surfer :)
  3. The way it works, at least in Canada, is you need to be registered in order to provide advice to clients. Anyone can trade, at least with their own money, but in order to advise clients on appropriate investment decisions, whoever they may be, you need to acquire the necessary educational requirements.
  4. thanks for answer

    Thats the way we wanna to do it. We want to trade for the firms on a managed account.

    What I am searching for now is the text of the law where it is printed black on white that we dont need series 7 or stuff like that.

    Anybody know where to find this things? SEC CFTC ???
    We want to trade both futures and stocks

  5. jessie


    I don't know about the equities side of things, but the NFA website will tell you exactly who is exempt and who requires registration when trading managed futures. I would assume that the NASD website has something similar.

  6. yes, i was speaking of equities only. if you have over a certain amount or number of investors, the NFA requires registration for futures.

  7. rwk


    Title 17 (Commodity and Security Exchanges) of the Code of Federal Regulations (CFR) has all the relevant regs. The last time I looked, 17 CFR was in four volumes. You can buy them from the Government Printing Office, and they're not very expensive. But they are *boring*.

    It is important to know what you can and cannot legally do. People sometimes go to jail for engaging in acts for which they need to be registered and are not. In my opinion, some of the prop firms requirements are more stringent than the regs call for, but lawyers could argue that long and hard. If you are only trading your own money for yourself, no registration is required.
  8. Hi Surf. Since we have both licensed and unlicensed trader in different entities, I can perhaps shed some more light on this.

    A trader with no license has to trade through retail brokerage. He/she is subject to margin rules and or "Pattern Daytrader" regulations, both limiting their ability to trade.

    All retail orders flow through the brokerage firm (for obvious reasons, capital etc.). "Professional" orders go through to the NYSe directly. We, as exchange members, are subject to a different set of rules than those who are not exchange members.

    The rule changes in 1998 caused us some "grief" at first (requiring our traders to be licensed professionals). But, in the long run, it is much better overall. We certainly did not want our traders to be reduced to "customer" status, that would have been disasterous for the traders ability to make money.

    This is my understanding, and since we had to "live through" all these changes a few years ago, I'm pretty sure my contentions are correct. If not, we sure spent a lot of money on legal fees, etc. LOL

  9. You can be registered with the NFA as a CTA, and this way you can keep your Series 3 "intact" with an annual payment of $100 to the NFA ( National Futures Association ). This will also allow you to have up to 15 accounts of high net-worth clients that understand the risk that you are taking.

    However, just because you are registered with the NFA, DOES NOT MEAN THAT YOU ARE A MEMBER OF THE NFA. Becoming a member of the NFA will require an annual payment of $1,000 per year for as long as you wish to be a member. By becoming a member of the NFA you will be able to have > 15 clients in managed accounts or a pool.

  10. thanks for the clarification, don.

    hope to see you guys in NYC at the expo !

    #10     Jan 23, 2004