Trading within a limited company

Contrarian1234

Newbie
8 0
Is it possible for me to manage my futures and options trading within a limited company, such that if I lose more than is deposited with my broker, I am not liable for it?

I've got to the point now where the total amount involved is large ( > £500k) relative to my net worth, and I'm engaged in trades which could potentially lose more than the whole £500k.

Thanks.
 

punjabi

Junior member
13 4
Alex,

You're basically asking "Can I use a limited company to take on lots of risk, and if it goes horribly wrong, then I want the safety net of being able to walk away from it all without personal liability?"
(Side note - this is similar to what the banks did a few years ago, resulting in the 2008 financial crises! They took massive risk, knowing that if they win, they'll make tons of money, and if they lose, the government will bail them out.)

The answer to your question is....'No'.
Otherwise, every trader in the land would set up a Ltd company for £50 off the net and gamble big amounts on margin.

I use a limited company to trade options. There is a margin requirement, and if the market moves against you, you WILL get a margin call from the broker. And in the case of IB, they will automatically close the trades if your account looks like it is at risk.

If you want to trade legitimately via a Ltd company, then of course, that is very much possible and acceptable.

All the best.
 

Contrarian1234

Newbie
8 0
"You're basically asking "Can I use a limited company to take on lots of risk, and if it goes horribly wrong, then I want the safety net of being able to walk away from it all without personal liability?" "

But that's precisely the position of a limited company (in any other field) in relation to its owners, isn't it? So if a limited company incurs huge losses, say, and has to go into liquidation, the owners' personal assets aren't seized.

If I set up a hedge fund, say, and the hedge fund goes bust, with losses exceeding the fund's assets, my personal assets aren't seized.
 

Contrarian1234

Newbie
8 0
Of course, as you say, it will almost never get to this point, because brokers will force the closing of positions way before that happens. I'm just wondering what would happen in an extreme scenario where the market crashed very suddenly, and it was impossible to trade out.
 

NVP

Legendary member
37,768 2,101
Is it possible for me to manage my futures and options trading within a limited company, such that if I lose more than is deposited with my broker, I am not liable for it?

I've got to the point now where the total amount involved is large ( > £500k) relative to my net worth, and I'm engaged in trades which could potentially lose more than the whole £500k.

Thanks.

jees mate ...........why don't you just join a bank ?...........that way the taxpayer can bail you out ? ;)
 
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock