Portfolio Manager registration in Ontario

M

MuscleHead

Hello,

I live in Ontario. I subscribe to an investment newsletter which I think is pretty good. I would like to sell a service to other subscribers of the newsletter where I do their trading for them. All the trades that I would be doing would be either based on the newsletter recommendations, or based on liquidation requests from the customers. I don't plan to offer any investment advice -- just trade execution.

The waters are pretty murky, but it seems like I would need to register as a "Portfolio Manager" (if someone knows differently, pls let me know!)

I've been looking at the Ontario Securities Commission (OSC) web pages regarding registration (http://www.osc.gov.on.ca/Dealers/Requirements/OSA/rrq_20050401_osa-ac-xprovincial.jsp), and it seems rather complicated. Are there any consultants that can help with this registration? The OSC won't even tell people if what they're doing in terms of providing investment advice requires registration -- they tell people to find a lawyer. Hiring a lawyer to fill up those forms seems like overkill...

Is it even possible for an individual to register as a Portfolio Manager? The forms talk about compliance officer this, Articles of Incorporation that... I'm just a guy who wants to execute trades. Is that Portfolio Manager registration only opened to banks and their employees?

Any advice with how to move this forward would be appreciated!

Thanks!
 
Do you have your CSC ?

I think the problem for you is you need a place to hang your hat, and in your case even if you were a "portfolio manager" or a registered trader, you still need to register your firm. Id start with selling your service on collective2 or something to avoid this hassle. Or sell your services directly to hedge funds where you simply work as a consultant, without the need to register. Or sell your service to US citizens and skip Canada altogether. Not entirely sure if this is possible in your case, but it is likely alot less work and potentially more financially rewarding.

Also, if you have a strategy that works, make it accessible to more than just Canadians.
 
Quote from MuscleHead:

Hello,

I live in Ontario. I subscribe to an investment newsletter which I think is pretty good. I would like to sell a service to other subscribers of the newsletter where I do their trading for them. All the trades that I would be doing would be either based on the newsletter recommendations, or based on liquidation requests from the customers. I don't plan to offer any investment advice -- just trade execution.

The waters are pretty murky, but it seems like I would need to register as "a "Portfolio Manager" (if someone knows differently, pls let me know!)

I've been looking at the Ontario Securities Commission (OSC) web pages regarding registration (http://www.osc.gov.on.ca/Dealers/Requirements/OSA/rrq_20050401_osa-ac-xprovincial.jsp), and it seems rather complicated. Are there any consultants that can help with this registration? The OSC won't even tell people if what they're doing in terms of providing investment advice requires registration -- they tell people to find a lawyer. Hiring a lawyer to fill up those forms seems like overkill...

Is it even possible for an individual to register as a Portfolio Manager? The forms talk about compliance officer this, Articles of Incorporation that... I'm just a guy who wants to execute trades. Is that Portfolio Manager registration only opened to banks and their employees?

Any advice with how to move this forward would be appreciated!

Thanks!
More...

In Ontario...
If you are going to reach out to the ** public **...
And manage money on behalf of public Customers...
Then there is NO WAY around becoming a Portfolio Manager.

And I say "becoming"...
Because it requires a 3 year apprenticeship... which means...
YOU must convince an existing Portofolio Manager to apprentice you for 3 years.

Also...
The OSC is not in the business of giving Legal Advice...
And 99% of lawyers have barely a clue when it comes to Securitues Regulation.
YES... everything in the business world is "murky".

Talking to a lawyer at a Law Firm that specializes in Securities Law... is NOT "overkill".

If you limit you money management to "family and friends"...
Roughly less than 15-20 people regardless of net capital...
That is specified as legal in many provinces like Quebec where IB is based...
And a "gray area" in Ontario... so no one will bother you.

But if you advertise (web site)... and deal with the public...
Full, total registration and regulatory filings will be absolutely mandatory.

And repeat:

Do not try to go into the business world...
Without ** expert **, expensive legal and accounting advice.
It's not worth it... you will pay 100x in the long run...
If you think you can get worthwhile advice on internet forums.
 
Do you have your CSC ?
More...
I do, along with my Conducts & Practices Handbook, Options Licensing Course, Futures Licensing Course, and Derivatives Fundamentals.

Taking (and passing) courses is not a problem.

The problem is other barriers to entry like "the individual has been employed for five years performing research involving the financial analysis of investments, and that three of the five years have been under the supervision of a registered adviser having the responsibility on a discretionary basis for the management or supervision of investment portfolios having an aggregate value of not less than $5,000,000".

I think the problem for you is you need a place to hang your hat, and in your case even if you were a "portfolio manager" or a registered trader, you still need to register your firm.
More...
Hmm... please explain why? The reason why I think I need to be registered as a portfolio manager in the first place is because that's what Interactive Brokers requires to open an Advisor account which can charge customers. Why would I need to register a firm?

Id start with selling your service on collective2 or something to avoid this hassle.
More...
That's actually a very interesting idea - I didn't know about this collective2. It seems like that was a wonderful idea in its own right. However, it doesn't work well in my case. I'm not selling a system; I'm selling a service.

Or sell your service to US citizens and skip Canada altogether. Not entirely sure if this is possible in your case, but it is likely alot less work and potentially more financially rewarding.
More...
Again, a very interesting idea. You're just full of those! I definitely would not mind skipping the Canadian market if that was simpler. It doesn't seem like it is simpler, however -- this is only based on my cursory understanding, so feel free to correct me.

First, according to another ongoing thread I got going (http://elitetrader.com/vb/showthread.php?s=&threadid=80506), it seems that my advisor account with IB would only be able to place trade for a US Customer of IB if I was a registered portfolio manager in Canada (and therefore have a pro advisor account with IB Canada).

Second, is it not true that to place trades on behalf of US customers with an IB US account, I need to register with every single state in which those US customers reside? I haven't looked at the requirements that such registration entails, but I'm not sure it would be simpler than Canadian registration. Thus, even if I could open an account with IB USA directly and bypass the Canadian requirements, it doesn't sound like American requirements are any simpler...?

Also, if you have a strategy that works, make it accessible to more than just Canadians.
More...
We're on the same wavelength here, dude!

Thanks for all the suggestions, that's awesome.
 
And I say "becoming"...
Because it requires a 3 year apprenticeship... which means...
YOU must convince an existing Portofolio Manager to apprentice you for 3 years.
More...
No kidding. Talk about barrier to entry! No wonder there's not much innovation in the financial industry services.

And 99% of lawyers have barely a clue when it comes to Securitues Regulation.
More...
Would you have any suggestions about how do I find a lawyer that knows what he's talking about?

YES... everything in the business world is "murky".
More...
Not everything in the business world. Just everything in the over-regulated financial services industry (I'm tempted to add "in Ontario", but it doesn't seem to only be here).

If you limit you money management to "family and friends"...
Roughly less than 15-20 people regardless of net capital...
That is specified as legal in many provinces like Quebec where IB is based...
And a "gray area" in Ontario... so no one will bother you.
More...
IB doesn't allow for charging those 15-20 customers with their "friends & family" account, like they do for their pro advisor account. But I guess you're suggesting that I find another way to charge those people that doesn't involve IB?
 
"The problem is other barriers to entry like "the individual has been employed for five years performing research involving the financial analysis of investments, and that three of the five years have been under the supervision of a registered adviser having the responsibility on a discretionary basis for the management or supervision of investment portfolios having an aggregate value of not less than $5,000,000"."


lol.

as soon as i saw the question, and knowing nothing about canadian securities laws, i KNEW that canada would have some sort of ridiculously overregulated nightmare for being a portfolio manager

typical of leftwing bureaucrat regimes
 
There has to be a way around it. Is hounds firm registered in ontario or elsewhere? Muscle, what if you just get in somewhere as a trader and run trades with scale? Like a real trading firm. You already have the CSC, etc, and some firms have buying power 10-100 times what you could ever manage to put together in your first 5 years in business. Or go to the states where you dont have to be a portfolio manager to trade.

I'm pursuing these alternatives myself, but am currently not as far along as you. I also have more ideas in terms of getting yourself in a situation where you are well capitalized without the legal b.s, but I'd have to pm them.
 
'I'm just a guy who wants to execute trades. Is that Portfolio Manager registration only opened to banks and their employees?'

You will still qualify as an investment advisor and in Canada in most provinces I think there are big capital requirements and atleast CFA Level 1 for the principals of the firm. This if you charge them percent of assets under management annually. If you want to act as a Broker and run trades and get paid by commission per trade then you might have to go and do the broker route with licenses etc. What is Canadian equivalent of Series 7 to become a stockbroker.

Regarding 'family and friends' 15-20 exemption I am not sure if the same rule applies in Canada as it does in the US for Accredited Investors. Someone already mentioned in this thread, and they might want to correct if my information is not upto date.
 
'as soon as i saw the question, and knowing nothing about canadian securities laws, i KNEW that canada would have some sort of ridiculously overregulated nightmare for being a portfolio manager

typical of leftwing bureaucrat regimes'

Well said, in the US there are states where one can manage upto 5 non accredited investors each year without needing registration. In NY it was upto 40 clients up until 2004 and now it is reduced to 5 clients.

I like the US logic, that if you are good at your trade then you will survive and soon will be handling not 5 but 50+ clients. If you are not good then you will drop out but with no ill feelings that you could not try it due to entry barriers and beaurucracy.
 
in my state, if u accept any compensation whatsoever, then you have to be registered with the state.

that is more restrictive than many states, but what do u expect in a heavily democratic state (vs. a more libertarian republican state )?
 
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