Is it illegal to open up a small Forex hedge fund?
I am a private Forex trader who wants to expand into a small online hedge fund. Note: This is not code for a pyramid scheme or ponzi scheme. I am talking about trading real money.
What is the legality on this? How much money can I trade before having to register with U.S. Securities?
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Filed under: Forex Information
You can have any kind of hedge fund you want.
The key is you need certain registration, the right fund docs, the right corporate structure, and the right legal advice which can cost you $10-50,000 in total depending on your structure.
The hardest part is you will have to find qualified investors who are willing to invest with you.
First off in order to trade other people’s money legally in the forex you will need to have your series three license. Registration with the NFA (National futures association) is easy. The paper work you need to have and get signed by your clients must be prepared by a lawyer just to cover yourself. First go and take a series 3 and then come back and talk
1) You should talk to your brokerage firm about this and avoid paying unnecessary set-up fees.
2) If your firm cannot or will not willingly assist with that, then move your account elsewhere.
3) There are different guidelines depending on the number of investors and assets under management you expect to have.
4) Go to miramar-research.com and elitetrader.com for additional info.