Quote from formikatrading:
I think your comment is misleading. If you're managing money and taking a fee, you still need to consider the registration requirements -- whether it's currencies, futures, stocks, bonds, etc. Even if you're using currencies, you would still need to consider the Registered Investment Adviser laws.
Sorry, just noticed your reply. The RIA regulations don't apply to investment advisers with less than $25 Million in AUM invested in
securities. There are a number of other exemptions and prohibitions from registration as well. An
overview may be found on the SEC website, with links to more details.
An SEC-exempt investment adviser of securities may or may not need to register with one or more states. A few phone calls or emails should be all it takes to determine if that's applicable to you; see the section called "State-Registered Advisers" on the above SEC page.
The NFA has its own
registration requirements and exemptions for different categories, with respect to
futures contracts or commodity options. For example, as you can see under the "CTA" category:
"Registration is required unless:
1. You have provided advice to 15 or fewer persons during the past 12 months and do not generally hold yourself out to the public as a CTA..."
You want a real-life example? I personally researched whether a multi-billion dollar currency-only hedge fund I was working at had to be registered as a CTA. The clear conclusion was "No." I then drafted a formal reply, it was signed by the #2 guy and sent off. (That was a few years ago; it's possible that regulations have changed, although I seriously doubt it.)
I'm currently managing small OPM and, after researching it extensively, concluded that I did not -- and, moreover, could not -- register. That's a shame... who doesn't love extra paperwork and fees?
The bottom line is this:
- Cash forex (both spot and forward contracts) are considered neither securities nor futures contracts under US law.
- This thread is called, after all, "Do you have to be registered to manage other people's money?"
- That's why I wrote "And if you are managing currency accounts via cash forex, no registration is required in most cases." That applies to just about any cash forex trader or manager who could conceivably be using this thread to answer the title question for themselves.
- For asset classes other than cash forex, the above SEC and NFA links would be a good jump-off point.
I hope this clarifies it. For the vast majority of private would-be managers the question "So, do I need to register or what?" is not a particularly complicated one, at least in the US. Cheers.
