L
Liquid validity
FCA Ask a questionDo I need to be regulated by the FCA if I open a advisor account to trade for some of friends' money? Just 3 of mine friends
Can anyone tell me?
Many Thanks,
Strictly speaking yes, you need to be regulated.
You could just put their money into your account and trade it.
If it goes south, they get cold feet or you just have bad drawdown,
things will change rapidly.
Its a massive risk to assume that won't happen.
In that case you are wide open to this:
How we enforce the law - Financial Conduct Authority
FS HandbooksFCA said:
So for that reason, I would suggest you don't do it.
Your choice, if your friends are persistent, show them this post.
You are wide open to criminal and civil prosecution if it hits the fan.
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Hoggums
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There was a member of T2W who did that, took in substantial sums of money from other members, started losing it and lied to investors about how he was doing.
Eventually he ran out of money and the game was up - FSA got hold of him for unauthorised activity and he is now banned from anything trading related, investors went after him was also made bankrupt.
So think carefully - if you lose money for these people - just how good are these friends of yours?
Eventually he ran out of money and the game was up - FSA got hold of him for unauthorised activity and he is now banned from anything trading related, investors went after him was also made bankrupt.
So think carefully - if you lose money for these people - just how good are these friends of yours?
timsk
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Hi terryzz5,
Very sound advice from both L_v and Hoggums, IMO.
If your friends are 100% certain they want to proceed and understand and accept fully that they may never see a penny of their money again, then there is another alternative to consider. They can open and fund their own accounts and give you access to trade them on their behalf. It gets around the issue of regulation and there's no danger of you walking off with their money. You can still lose it all of course - but you can't nick it! Also, assuming you're doing it for a share of the profits, you'll be beholden on them to pay you your share - assuming all goes according to plan. So, you and your friends really need to trust one another.
Tim.
Very sound advice from both L_v and Hoggums, IMO.
If your friends are 100% certain they want to proceed and understand and accept fully that they may never see a penny of their money again, then there is another alternative to consider. They can open and fund their own accounts and give you access to trade them on their behalf. It gets around the issue of regulation and there's no danger of you walking off with their money. You can still lose it all of course - but you can't nick it! Also, assuming you're doing it for a share of the profits, you'll be beholden on them to pay you your share - assuming all goes according to plan. So, you and your friends really need to trust one another.
Tim.
BS
No UK broker will allow this! if there are then do let me know, i would be interested.
But yes those brokers in Mauritius or Cyprus will allow without you being regulated
then the question is how safe is the broker? are your funds safe?
FCA regulation? is it costly? anyone has any experience? knowledge?
spinola
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Is there a list of these banned individuals for the public to monitor ?
And how are members at T2W protected from future grooming on these boards ?
Purple Brain
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I've opened a Financial Advisor account with Interactive Brokers for Futures Trading.
You opened a Financial Advisor Account with IB without providing any professional accreditation details?
random12345
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I've opened a Financial Advisor account with Interactive Brokers for Futures Trading.
I advise you get in writing a note of advice from IB's legal team explaining where in the RAO your exemption is satisfied and under what part and provision.
http://fshandbook.info/FS/html/handbook/PERG/2/Annex1
I don't know. I have a limition that I can only trade for less than 15 people and manage the total of 23 million dollars.
Purple Brain
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Are you saying 'no' you haven't opened a Financial Advisor Account with IB or 'no' you have opened it, but you did so without them requiring any professional accreditation conformation from you?
If you're still UK based then I understand you will require FCA authorisationAND you'll need to pay UK taxes on your fees & profits which I understand you were unhappy to do a year or so ago.
random12345
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Means nothing - you need them to point out where in the act and the Regulated Activities Order that you're covered for exemption. You might fall under some kind of appointed representative exemption, but my understanding was that the appointer had to be regulated in this instance. On the other hand, it's possible that you may not be carrying on a business in the view of the act, but then this is hard to establish for futures trading if you ask me as rarely is it mentioned except as a regulated activity.
As unlikely as it is, if the sh!t hits the fan and this guy ships you to the FCA, IB will not help you - you need to help yourself first and see exactly where you are covered. All of this stuff is a matter of public record (legislation.gov.uk) so they should be able to send you links.
Hi random12345,
Is it legal to trade for friends via a joint account without under the regulation of FCA?
random12345
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There's no legal definition of friend so they're just other persons in the view of the act - I've only ever worked with FCA issues at firm level, not as an individual retail trader so I don't know the answer. As I said in my previous post, there's a lot of information in the handbook, the act and the order to piece together - it could take many hours, but if you spoke to someone at IB who told you that you were okay for a fact then they must be able to provide the articles under which you are covered. Once they have done that you will have peace of mind.
Alternatively your friends could loan you the money under an unsecured loan agreement for a % return agreed in writing. The agreement must make clear that the loan is unsecured etc etc.
Purple Brain
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Won't that put him into the same category as a payday loans type org?
random12345
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Why's that? He's just taking money off friends - if anything it's them that need to worry in case they are becoming bona fide commercial lenders, which they won't be unless they tend to make a loan a day etc etc.
