Do I need to be regulated by the FCA?

[Purple Brain]

Mightypen is the type of madman that always brightens my day. I honestly hope he is never banned.

LOL. It's even funnier of you read it in loci accentus. Did it by accident initially.

He probably needs to be more concerned about unregulated brain cells.

 

[Black Jack]

I don't personally agree with this, for me the FCA/act is clear:

"Any person wishing to carry on one or more regulated activities, by way of business, must apply to us for authorisation (unless they can abide by the terms of exclusion or are exempt)."

Business is defined in the act and handbook, exemptions defined in the act and RAO. You can be an individual trading mate's money and fall foul of both - there is no exemption stated in the handbook or legislation for someone taking money from friends to trade that I have ever read so long as the business element test is left relatively vague - if you know of applicable sections/articles to the contrary then I would be happy to see them.

There are exemptions for 'small firms' from requiring capital adequacy checks (or their ICG will be very low) and all of the other functions you mention by way of permission profiling, an individual can arrange to do all of these via the application pack. I don't know what you mean as register as a business outside of the FCA business registration, which you mention separately. Businesses are not registered except by UTR if they are not a company?

In my opinion, anyone considering trading OPM should get an exemption letter from the FCA in writing if such an exemption exists.

I’m afraid I will disagree with you again. Effectively, if I am correct, you are running an investment club. In law, Investment Clubs are formed as partnerships with each member holding a share. The Financial Services and Markets Act 2000 states that it is a requirement that anyone carrying on an investment business must be authorised unless their activities are excluded from the scope of the Act. It is, however, impractical for an Investment Club to become authorised and so members of a club are exempt, provided that they do no more than act on their own or the Club’s behalf and that there is no reimbursement.

To avoid the need to become regulated you should set up an Investment Club. There is a restriction on the number of members allowed with the maximum being twenty. You need to draft a constitution and rules upon which you all agree which should include timing of meetings, subscription fees and investment direction. You need to appoint the Club’s officials: Chairman, Treasurer and Secretary. The Club also needs to have a name. You will need to open a bank account in the Club’s name and to avoid any legal difficulties the bank needs to be informed of this. You should also inform HMRC of the existence of your club and the individuals involved as individual members are liable for taxation on their share of the income and capital gains. You should select a reputable broker using an execution only service. The broker needs to be informed that the account with them is for the purpose of an Investment Club. Finally you should register your club with the FCA. Importantly, members of the Club must not provide advice to non-members of the Club.

 

[random12345]

I’m afraid I will disagree with you again. Effectively, if I am correct, you are running an investment club. In law, Investment Clubs are formed as partnerships with each member holding a share. The Financial Services and Markets Act 2000 states that it is a requirement that anyone carrying on an investment business must be authorised unless their activities are excluded from the scope of the Act. It is, however, impractical for an Investment Club to become authorised and so members of a club are exempt, provided that they do no more than act on their own or the Club’s behalf and that there is no reimbursement.

To avoid the need to become regulated you should set up an Investment Club. There is a restriction on the number of members allowed with the maximum being twenty. You need to draft a constitution and rules upon which you all agree which should include timing of meetings, subscription fees and investment direction. You need to appoint the Club’s officials: Chairman, Treasurer and Secretary. The Club also needs to have a name. You will need to open a bank account in the Club’s name and to avoid any legal difficulties the bank needs to be informed of this. You should also inform HMRC of the existence of your club and the individuals involved as individual members are liable for taxation on their share of the income and capital gains. You should select a reputable broker using an execution only service. The broker needs to be informed that the account with them is for the purpose of an Investment Club. Finally you should register your club with the FCA. Importantly, members of the Club must not provide advice to non-members of the Club.

Unfortunately the individual who asked the original question deleted or dotted out his posts so I don't know if you read those - his question was he was going to trade 150k of a friends money (through futures) on his behalf in a managed account and share the profits - said friend has no input in how the money is traded and apparently didn't care if he lost it all (hence why we joked he must be worth at least 50 million and then it went all a bit quiet).

Not only have I never seen a UK investment club account with the option to trade futures (not to say this isn't possible, my experience of them is nothing beyond reading adverts), the bona fide structure he was talking about bears no resemblance to what I understand an investment club to be (as you have described).

IMO what he said was managing OPM and every fin reg lawyer I've ever dealt with would recommend interaction with the FCA.

 

[Black Jack]

Unfortunately the individual who asked the original question deleted or dotted out his posts so I don't know if you read those - his question was he was going to trade 150k of a friends money (through futures) on his behalf in a managed account and share the profits - said friend has no input in how the money is traded and apparently didn't care if he lost it all (hence why we joked he must be worth at least 50 million and then it went all a bit quiet).

Not only have I never seen a UK investment club account with the option to trade futures (not to say this isn't possible, my experience of them is nothing beyond reading adverts), the bona fide structure he was talking about bears no resemblance to what I understand an investment club to be (as you have described).

IMO what he said was managing OPM and every fin reg lawyer I've ever dealt with would recommend interaction with the FCA.

If that is the case, then I would agree that he needs to be regulated. From what you describe it appears that the person trading is not using his own funds to trade and is effectively providing a discretionary dealing service for which he is being reimbursed by way of the shared profits. I would suggest that he needs to approach the FCA for clarity on this but I’m pretty sure they would require him to be regulated.

 

[neil]

All these sound lame to me. Of course, regulation has been made a safe heaven, but is it? The reality is this, when you lose your money, regulatory bodies will go after the culprit, but will you get your money back? NO. I have been following these scam cases for a while now and I have not seen any trader who raised hands to say "I got my money back"!. It is even worse these days, FCA, AUSIC and NSA are all failing. There is no longer any effort to keep brokers in check. So, what is the need to demand for regulation these days. After all, there is no 100% fund safety in forex, regulation or not. So, please, trade/invest at your own risk. Isn't this what the broker tells us nowadays?

More spam from Nigeria?
You have to be an idiot or have a personal interest in non regulation for investors

 

[Black Jack]

More spam from Nigeria?
You have to be an idiot or have a personal interest in non regulation for investors

You mean SPAM or SCAM?

 

[NVP]

Do 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,

they will be the last of your worries dude ......