Trading with yourself?

Discussion in 'Order Execution' started by kubilai, Jul 7, 2008.

  1. kubilai


    Say you have two accounts under your name, is it legal to have the two accounts trade with each other? I'm thinking this is a fast way to transfer positions, instead of using ACATS.
  2. Jaba122


    I'm not an expert, but I read sometime ago that it's strictly forbidden
  3. kubilai


    Thanks for the quick reply. Do you remember the source? Or a keyword to look it up with?
  4. ACAT is one way the other is to leave the orders out there. Don't print your own paper as you can get in a sticky situation if they find out. Its one thing to do it in the same account to paint the tape, not a good idea to do it from one account to another.
  5. Not legal. like the above said, it's call painting the tape.
  6. Um, the intent of painting the tape is completely different from what the OP wants to do. That's creating artificial activity in an issue through a cabal of traders focusing attention on it.

    Here's an example of what he's asking, I think. Say you have a normal non-tax-deferred trading account and an IRA. You're restricted to contributing $5000 max each year to that IRA. The only other way to "add" money to the IRA is to have trading gains.

    Suppose you open a futures trade in YM in the normal account and you deliberately go in the wrong (losing) direction. In the IRA you take the opposite trade in YM. It's like pumping money from the normal account into the IRA.

    Of course the catch is knowing the right and wrong market direction. You might pump money out of your IRA inadvertently. Or maybe you wanted to do that - basically a penalty-free IRA withdrawal.

    Sounds totally illegal but I'm not sure how easy it is to detect.
  7. That's not illegal, it's called a hedge.
  8. nkhoi

    nkhoi Moderator

    why is it illegal, am I missing something?
    ps. it's not a hedge either, these are 2 diff account, one just can not offset another.
  9. Surdo


    It is illegal to get your own name on the NYSE unless their is a change of ownership. The OP never clarified if he was trading stocks/futures or whether an IRA/Cash account was involved.

    Lets not play compliance officer until we have the facts.


  10. Call the sec and ask them.
    #10     Jul 9, 2008