What tools are missing if I start a hedge fund today ?

Discussion in 'Professional Trading' started by ramaTrade, Nov 13, 2009.

  1. 1. Use Interactive brokers as my prime broker.

    2. Have a Bloomberg terminal

    3. Self sufficiently funded,

    4. Lot of experiences in all four markets ( Equity, Bonds, FX and Commodities ), plus futures and options.

    I don't have investors lined up yet and I am not able to trade many OTC products, so what else am I missing ?
  2. Besides investors? Probably a track record, but if you have one as you indicate you have experience, maybe you won't have a problem.
  3. What other tools/technologies/platforms do I need ?
  4. You need a disclosure document; an auditor - allegedly they are suppose to have passed some licensing exam specifically focused on investments - not some one-clown shop located in the sticks (yes I am referring to Madoff, how he got away with his auditors is beyond me); an administrator. These startup fees are going to run 75k+/-. Someone with a silver tongue to raise money.
  5. the1


    These are the things you need in order.

    1. An audited track record. Cost: $5-10k
    2. A securities license.
    3. Private Placement Memorandum, Operating Agreement, Subscription Agreement. If you have a lawyer do this for you it will cost about $15-20k.
    4. Registration with the NFA or SEC, depending on what you are going to trade and the size of your startup.
    5. A broker. IB isn't a Prime Broker, just a broker. A Prime Broker would be someone like GS, MS, MER, and such. These guys feed you research, steer clients to your fund, and if you are really good and swing a big stick you get inside information. I'm not kidding about that.

    That's all I can think of off the top of my head.

  6. Dude, you got a damn bloomberg, right? I don't know what else you think you'd need when you got all the financial information in the world at your fingertips. Excel, VBA maybe, programmers for automation if you ever get to that point. Perhaps more research into strategy trading? It's interesting to me that you have a bloomberg and are asking these questions. Did you know what you can do with one of those? I'd kill to have access to forward rate swap agreements for forex and bonds. Go study how to do covered interest rate parity arbitrage. The only thing stopping me from doing that is the data, which costs too much, but you're paying for. It really strikes me as odd that someone paying $2 grand a month for a bloomberg is asking these questions.
  7. Neither one of these cost anything, and a securities license is not required.
  8. the1


    I don't know about the Series 7, you could be right about that, but the Series 3 is required if you want to manage in excess of $400k in the futures markets and if you want to manage money for clients who live in California you have to be a Registered Investment Advisor in that state, regardless of the amount of money you are managing. You have to know the specific laws of each state you have a client in. It's good to work with an attorney who can keep you out of those nets.

    And I agree about the documents. They can be obtained for free if you have the right connections.

  9. sjfan


    You.... are.... kidding.... right? What's stopping you from doing covered interest rate parity arb is ... a bloomberg? You do realize that FRAs are priced so there is not possible covered int rate parity arb?

    I got a blp here right now.... i'll quote you whatever you want and if you can show me how you can do a covered interest rate parity arb, I'll put in money for an investment fund with you this instance.

    #10     Nov 13, 2009