CTA Startup

Can you not disclose your strategy?

What is the min cost of getting a CTA designation? I think if the AUM is small, we don't have to register.
 
Quote from yip1997:

Can you not disclose your strategy?

What is the min cost of getting a CTA designation? I think if the AUM is small, we don't have to register.
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I meant "can a CTA not disclose his/her strategy?"
 
Quote from heech:

I believe that part isn't optional. I believe if you are a new CTA, but you've prop traded recently, you must disclose those results.
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I think I misspoke. Looking at the above document again, you only have to disclose your prop trading results *if* you're publishing hypothetical historical trading results.
 
Quote from SuperVolatility:

Aaron,
just curious why would you settle in Harland, Wisconsin? :D
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Because that's where my wife and children live. :D Actually, I grew up here and like it better than the other places I've lived. It feels like home in many ways.
 
I am looking into all the pro's and con's with a CTA vs. a CPO vs. a LP. First of all, a CPO is a hedge fund, correct? It's just an LP like a hedge fund. But, could one just do a hedge fund and not have to register with the NFA, etc?

What I do is managed futures and currencies. Swing trade about 10 instruments. I do have an LP with one other individual trading at interactive brokers, but moving forward with other clients, I am trying to pick the best structure. It seems a CTA is the least expensive to setup. Just setup a LLC management company, correct?

It also seems a CPO is more expensive, like a hedge fund with administrators, accounting, etc...but much easier to manage one account. I see that many are both CTA's and CPO's. Anyways, I am moving forward with this and trying to learn as much as possible. I also could go with a consulting company like greentrading or turnkey hedge funds, etc to help out in the process.

TIA!
 
Quote from Stok:

I am looking into all the pro's and con's with a CTA vs. a CPO vs. a LP. First of all, a CPO is a hedge fund, correct? It's just an LP like a hedge fund. But, could one just do a hedge fund and not have to register with the NFA, etc?

What I do is managed futures and currencies. Swing trade about 10 instruments. I do have an LP with one other individual trading at interactive brokers, but moving forward with other clients, I am trying to pick the best structure. It seems a CTA is the least expensive to setup. Just setup a LLC management company, correct?

It also seems a CPO is more expensive, like a hedge fund with administrators, accounting, etc...but much easier to manage one account. I see that many are both CTA's and CPO's. Anyways, I am moving forward with this and trying to learn as much as possible. I also could go with a consulting company like greentrading or turnkey hedge funds, etc to help out in the process.

TIA!
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It's not difficult to find the registration requirements on the NFA website, and I recommend them to you. In short, if your hedge fund trades futures it is a commodity pool and you are required to register with the CFTC. If your hedge fund trades stocks and equity options, it doesn't.

You don't necessarily need to set up an LLC management company to become a CTA. Your CTA could be a sole proprietorship like mine. There are advantages and costs to forming an LLC.

A CPO runs a managed futures fund. The CPO could outsource the trading within the fund to other CTA's and not be a CTA themselves. But many CPO's trade their own pools (like I do), so they are also CTA's. That's why you see many CPO's are also CTA's.

Besides Greentrading and Turnkey, I also consult on CPO and CTA set up and management (compliance, accounting, taxes, automated trading, etc.), so please keep me in mind if you want more thorough help than short ET responses.

Good trading!
Aaron Schindler
 
A "hedge fund" is just a concept, a general term. A limited partnership is a common legal format.

If you're a hedge fund or LP that trades futures as part of your business (I believe the number is >10% of assets), then you must register as a CPO. (I assume there are possible exemptions here, but nothing that would apply to you/me.)
 
Quote from Aaron:

It's not difficult to find the registration requirements on the NFA website, and I recommend them to you. In short, if your hedge fund trades futures it is a commodity pool and you are required to register with the CFTC. If your hedge fund trades stocks and equity options, it doesn't.

You don't necessarily need to set up an LLC management company to become a CTA. Your CTA could be a sole proprietorship like mine. There are advantages and costs to forming an LLC.

A CPO runs a managed futures fund. The CPO could outsource the trading within the fund to other CTA's and not be a CTA themselves. But many CPO's trade their own pools (like I do), so they are also CTA's. That's why you see many CPO's are also CTA's.

Besides Greentrading and Turnkey, I also consult on CPO and CTA set up and management (compliance, accounting, taxes, automated trading, etc.), so please keep me in mind if you want more thorough help than short ET responses.

Good trading!
Aaron Schindler
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Thanks Aaron. I think I would want an LLC for the management co for legal protections, and my partner in our LP would be part owner of the LLC.

Starting out thou, it seems to go with the CTA route, then maybe the CPO route? What I would do it start the management co., and then manage our LP as the first client. Then add some more clients. I did talk with MF Global 2 years ago, and they said to setup a CPO/Fund first (if we moved our account there) and they would help raise money...said it was easier than a bunch of individual accounts.

So, you trade individual accounts (like a CTA) and run a CPO?

I have one question about interactive brokers, and using them for individual accounts - Are all the individual accounts pooled into one omnibus account (kinda like a CPO)? And can you allocate profits to each account, instead of trades?

I may take you up on the Aaron...PM me on rates, etc.

Thanks!!
 
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