whether a proprietary trading firm needs be regulated by FCA in the UK or not?

[Aston1st]

Well the intention is to take on clients, i have people that want to invest into this,
However I'm not confident the 15 "family and friends" rule applies in the UK and was hoping from some clarification on that and also the previous questions.

The FCA are vague on this. I have asked them direct the same question and their answer was to seek legal advice on their own rules. The Bloke did not know. I suppose it covers them but in a nutshell if you are an individual you can trade your own funds. If you are business partnership you can trade your own funds. If you are a company you can trade your own funds.

If that company allocates shares privately and the shareholders receive a percentage of any profits made and those profits derive from trading then fair dues. The question is how much would one value the company at?

I think the key here is that the shares are sold privately and not to the public.This is just my own unqualified opinion based on what I have read on the FCA and passing the FCA UK regulation and professional integrity papers a few years back.

 

[Fibking]

The FCA are vague on this. I have asked them direct the same question and their answer was to seek legal advice on their own rules. The Bloke did not know. I suppose it covers them but in a nutshell if you are an individual you can trade your own funds. If you are business partnership you can trade your own funds. If you are a company you can trade your own funds.

If that company allocates shares privately and the shareholders receive a percentage of any profits made and those profits derive from trading then fair dues. The question is how much would one value the company at?

I think the key here is that the shares are sold privately and not to the public.This is just my own unqualified opinion based on what I have read on the FCA and passing the FCA UK regulation and professional integrity papers a few years back.

Hi Aston

Thanks for the response.

where, in your opinion would i stand as a limited company trading other peoples funds through gaining power of attorney?

I have read a lot of FCA papers and nothing is clear.

I have sought legal advice, again that's vague.
1 person who i spoke with believes that FCA is only relevant when providing financial advice, or offering finance/loans.
so they do not believe its needed for FCA regulation/approval for trading funds as technically its not covered under this banding.

your thoughts would be appreciated

thanks

Fibking

 

[Aston1st]

If you are trading other peoples money through power of attorney, it's a difficult area. On the safe side I would say you SHOULD be regulated.

Maybe, if the people you were trading for are self certified High Net worth Individuals or Sophisticated investors then possibly doable, but to cover yourself belts and braces FCA regulation would be the way forward.

Another point would be to ensure that company doe'snt hold client money in any shape or form. More importantly that the clients are made aware of the RISKS- RISKS-RISK-RISKS-RISK involved in trading and that they fully accept them, in writing. I would very much emphasize what the risks are to any individual that was thinking of going down the route of having somebody else trade their account.

9/10 that is where the problems lie, individuals or companies playing up the REWARDS and down playing the RISK's because they are frightened that the truth will put off potential investors. My response to that is that they are not finding the right investors.

Whereas if the investors are investing in you the Company and taking a cut from YOUR profitability that has to be different matter.

This is only my opinion and I am not a qualified Lawyer nor FCA member but I can read English and what I have read from the FCA doesn't seem to contradict what my opinion is.

 

[proptrader101]

i believe this is a grey area and depends on how things are structured.