managing accounts

chinook · Feb 21, 2005

Quote from Aaron:

Clause 29 in the Interactive Brokers customer agreement for individual accounts reads:

I recommend creating a partnership and opening an account in the partnership's name rather than your own. The partnership will be the pool rather than you, personally. If your partnership is under $400k in assets you will likely be exempt from CFTC registration.

Aaron,

Thank you for pointing out that clause. I completely forgot about it.

Manu · Feb 23, 2005

Quote from Aaron:

...I recommend creating a partnership and opening an account in the partnership's name rather than your own. The partnership will be the pool rather than you, personally. If your partnership is under $400k in assets you will likely be exempt from CFTC registration.

Aaron,
if I could please ask you about how you structured your business?! I tried to look you / your company up on both the NFA and the NASD / SEC websites, but could not find anything under "Schindler". How does one get around registration (legally, of course!!!), but still advertise and / or have more than $400K under management?
Thanks for your help.

LongView · Feb 23, 2005

I believe you have to be under $200K in order to be exempt from having to register as a CPO.

Aaron · Feb 23, 2005

Quote from Manu:

Aaron,
if I could please ask you about how you structured your business?! I tried to look you / your company up on both the NFA and the NASD / SEC websites, but could not find anything under "Schindler".

Hi Manu,

Not sure how you missed me or Schindler Trading in the NFA database. Just go to the NFA website (www.nfa.futures.org), select "Broker/Firm Information (BASIC)" from the menu at the top, and search on "Schindler" for either firm name or individual last name, and you'll see me. :-)

Here's a link directly to my record: http://www.nfa.futures.org/basicnet/Details.aspx?entityid=0310098&rn=N

You have to register with the CFTC and be an NFA member to "hold yourself out to the public as a CTA", i.e. advertise with the www.SchindlerTrading.com website like I do.

Aaron · Feb 23, 2005

Quote from LongView:

I believe you have to be under $200K in order to be exempt from having to register as a CPO.

It used to be $200k when I started my fund, but now it is up to $400k: http://www.nfa.futures.org/registration/cpo.asp

chinook · Feb 23, 2005

Aaron,

FYI, your web site is down.

What is the difference between COMMODITY TRADING ADVISOR and COMMODITY POOL OPERATOR? I see that you registered for both.

Thanks.

LongView · Feb 23, 2005

original quote from Aaron:

It used to be $200k when I started my fund, but now it is up to $400k: http://www.nfa.futures.org/registration/cpo.asp

Has that changed recently? I registered as a CPO because I started with $250K. I could have sworn $200K was the cut off. I see your link and see you are correct. I guess I missed something when I read over the rules and regs.

Aaron · Feb 23, 2005

Quote from chinook:

FYI, your web site is down.

What is the difference between COMMODITY TRADING ADVISOR and COMMODITY POOL OPERATOR? I see that you registered for both.

Thanks.

Thanks for the heads up about our website. I'll check into it.

Here're the CTA and CPO definitions from the NFA:

A CTA is an individual or organization which, for compensation or profit, advises others as to the value of or the advisability of buying or selling futures contracts or commodity options.

A CPO is an individual or organization which operates or solicits funds for a commodity pool; that is, an enterprise in which funds contributed by a number of persons are combined for the purpose of trading futures contracts or commodity options, or to invest in another commodity pool.

A CTA basically either publishes trading signals with something like a newletter or chatroom, or else has power of attorney to actuallly make trades in a client's account for them. A CTA never takes posession of your money -- if a CTA trades your account _you_ will still be the owner of that account.

A CPO collects investor funds and pools them together into a single brokerage account owned by the pool (and then the pool is, in turn, owned by the investors). The pool is typically a limited partnership.

A futures pool is more commonly called a "managed futures fund" and some people include managed futures funds as a category of hedge funds.

An advantage to investing in a pool/fund is that they usually have lower minimums and you can't lose more than your initial investment. On the other hand, an advantage to having a CTA trade your separate account is the safety of maintaining custody of your assets -- you have to initiate or sign off on any withdrawals. Schindler Trading manages both separately managed accounts and a fund, so we are registered as both a CTA and CPO.

Aaron · Feb 23, 2005

Quote from LongView:

Has that changed recently?

Yes, the CFTC changed the CPO exemption limit from $200k to $400k in August, 2003.

Manu · Feb 23, 2005

Quote from Aaron:

Hi Manu,
Not sure how you missed me or Schindler Trading in the NFA database...

Aaron,
thanks for being so forthcoming and helpful...the true spirit of ET!!!

I don't know either how I could have missed you (found you this time), as I did the same search last night and nothing came up...perhaps the website was partially down.