Trading for other people

[Grob109]

NFA rules on this stuff.

You have to file under NFA Rule 2-8 (E). You should use part a) according to your description of what you wish to do. If these folk are relatives, you still have to file and part d) applies.

The rule is time governed (12 month cycle) and limited to how many persons you can deal with (up to 15). It is not broad, meaning your POA's in equities do not count.

Filing is manditory and updating your filing is manditory.

By filing, you exclude yourself from a lot of other possible activities.

There is a key disclosure issue as well. Once you disclose, CFTA has the record or access to it out of your control to prevent it from making the rounds.

Your employer (no matter who) becomes part of the record as well.

 

[syd697]

Yes, I just found out that info about allocating trades. It seems though that if I only have 1 account for another person, (at least for now), it is much simpler paperwise and taxwise to open an individual account with power of attorney.

It seems that the IB friends & family account has more paperwork to fill out when opening up an account, and the master account is under the name of the person who is executing the trades. With an individual account, everyhting is kept under the individual's name who the trades are being made for.

Anyway, for my purposes, with only 1 account for another person, it makes sense to do it the simplest way which is an individual type of account with power of attorney.

Thanks.

 

[mrmarket]

I set up an online account for my brother's IRA. I trade it exclusively for him and am up 60% this year.

 

[gms]

Quote from syd697:

Yes, I just found out that info about allocating trades. It seems though that if I only have 1 account for another person, (at least for now), it is much simpler paperwise and taxwise to open an individual account with power of attorney.

It seems that the IB friends & family account has more paperwork to fill out when opening up an account, and the master account is under the name of the person who is executing the trades. With an individual account, everyhting is kept under the individual's name who the trades are being made for.

Anyway, for my purposes, with only 1 account for another person, it makes sense to do it the simplest way which is an individual type of account with power of attorney.

Thanks.

You make the paperwork sound intimidating. I've opened several accounts after establishing a FA account. I print out the paperwork, get them signed and send it in. No big deal. It's just a handful of documents to establish the FA account, that's all it takes.

Though the FA account is in your name, the separate managed accounts are in the names of the individual account holders. There are no tax implications for the FA. The FA's authorization to trade the account is established by the individual account holder giving POA to the FA, which is one of the documents in the paperwork. The simplest way? It is the FA, as you can then trade multiple accounts with virtually one click. Sure beats running a bunch of separate platforms, and jumping from window to window entering and reentering orders, and jumping around to modify them, and jumping around to monitor them.