Should a CTA become an LLP with a broker? | Traders Hideout - futures trading strategies, market news, trading charts and platforms

Traders Hideout

Discuss day trading practices and futures trading strategies on this forum for all markets. This forum is also for discussing and reviews for brokers, data feeds, and commercial or third party add-ons


Should a CTA become an LLP with a broker?

  #4 (permalink)

New York, NY
Trading Experience: Beginner
Platform: Vanguard 401k
Broker/Data: Yahoo Finance
Favorite Futures: Mutual funds
Posts: 1,046 since Jul 2012
Thanks: 718 given, 2,145 received

vitaly500 View Post
Hi All.
As a new CTA, should I consider LLP(Limited Liability Partnership) with a brokerage firm? and work as a sub-contractor? If yes what should I consider, is that common practice? Should I negotiate specific terms?
Thank you.

Your question doesn't really make sense.

1. You form a LLP, or any entity, with the state, not another company. You can merely enter into a joint venture with another company and insodoing form an entity with the state.

2. An LLP is a more common structure for law firms, because of insulation between partners from personal malpractice. It's quite likely you're thinking of an LLC or LP instead.

3. A subcontractor simply designates that you're receiving income via Form 1099 and do not have certain rights and protections available to W-2 employees, e.g. insurance. If you're a partner with said brokerage firm, it would probably make no sense to become a subcontractor of your own company as there's good possibility that you self-deal, which may then trigger certain tax liabilities.

4. Almost all professional trading firms I'm aware of form a Chinese wall to separate agency and principal flow. There's a conflict of interest if the two are managed by the same business.

I'm not an attorney and recommend you seek qualified legal advice on this as you're going into this heavily misinformed, and CTA misconduct is one of the easiest ways to be barred from trading on CFTC-regulated exchanges forever.

Reply With Quote