legal advice needed

PanagiotisCharalampous
24 Dec 2021, 08:32

Hi jmenotts,

if you are serious about this e.g. operating your service under a business registered in the UK, no matter what you read here, better consult with a lawyer or a with FCA directly. To be honest, I am trying to answer the question myself for the last one year, here in Cyprus, but nobody is 100% sure. Not even the chairman of CySec. 99% the answer you get is that you need to be regulated. Better safe than sorry.

Best Regards,

Panagiotis 

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swingfish
20 Feb 2022, 05:28 ( Updated at: 20 Feb 2022, 05:29 )

"technically" No, because you do not offer investment services (Spotware does) so the burden of KYC and accreditation is in the Spotware end.
if they are not regulated, they would be required to execute a KYC, making sure the investor is accredited. if regulated, only the KYC would be required.
but since cTrader Copy is just a tool that is utilized by Brokers, the burden of the KYC is pushed to the Broker instead, the place where the actual Funds do end up.

all this makes you a Consultant/Contractor that gets's paid commissions,

but like stated by Panagiotis, it's better to get regulated anyway, a regulation in the activity you will actually provide is not expensive or complicated, as you do not engage in fund management directly, audits and other things are not coming into play, the "regulation" is more like a "registration" where the FCA basically acknowledges your existence, and not really regulates you as there is nothing to regulate, the flow of funds is regulated via the Brokers, as they do execute and handle the funds.

basically, you get paid by Spotware and/or brokers for pressing buttons, no capital gains on your end besides your own.
if your own Juristic person does state the activity in the same manner, this is pretty safe.

swingfish
20 Feb 2022, 06:04

one additional note, and the main reason I was (and still am) against the decision of Spotware to remove the old Copy feature

being replaced with the now new "copy" which isn't Copy but a Financial management tool that actively allocates funds to traders/strategies,
this is not only a bad business decision by Spotware, as the old system worked perfectly fine.

As this is not a copy service like it was before (eg. a service provided by spotware for a fee) but active investment/fund management which requires proper regulation.

Keep in mind, regulation is not a wildcard for all financial activities!
Brokers may be regulated but that doesn't make them Hedge Funds or Investment Firms by default allowing them to engage in such activities.

if you look up regulations, most brokers do not have the flag for Fund management checked, as this is not what brokers do (different scope of activities)
(example: if your company build bridges, that doesn't make it an Architect or city planner) :)

this is why Metaquotes MAMM/PAMM Systems are highly questionable and only run by brokers that are regulated in some odd places, as the major regulators have a serious problem with those activities. the new cTrader Copy system is essentially the same, which puts this on a short leash, it's just a matter of time when the major regulators put an end to this and force brokers to stop offering it, or force the providers of strategies to be regulated investment firms.

Spotware is just a Service provider for a Software solution, there is nothing illegal going on here, the only thing that matters is the path the money goes, not the tools that are used.

keep in mind, regulators are "reactive" not "proactive" meaning once there is a major complaint against a bad player using cTrader Copy, regulators will have a look at the system and determine its faith after the damage was done.

HVofficiel
09 Jan 2023, 04:54 ( Updated at: 09 Jan 2023, 04:56 )

RE:

swingfish said:

one additional note, and the main reason I was (and still am) against the decision of Spotware to remove the old Copy feature

being replaced with the now new "copy" which isn't Copy but a Financial management tool that actively allocates funds to traders/strategies,
this is not only a bad business decision by Spotware, as the old system worked perfectly fine.

As this is not a copy service like it was before (eg. a service provided by spotware for a fee) but active investment/fund management which requires proper regulation.

Keep in mind, regulation is not a wildcard for all financial activities!
Brokers may be regulated but that doesn't make them Hedge Funds or Investment Firms by default allowing them to engage in such activities.

if you look up regulations, most brokers do not have the flag for Fund management checked, as this is not what brokers do (different scope of activities)
(example: if your company build bridges, that doesn't make it an Architect or city planner) :)

this is why Metaquotes MAMM/PAMM Systems are highly questionable and only run by brokers that are regulated in some odd places, as the major regulators have a serious problem with those activities. the new cTrader Copy system is essentially the same, which puts this on a short leash, it's just a matter of time when the major regulators put an end to this and force brokers to stop offering it, or force the providers of strategies to be regulated investment firms.

Spotware is just a Service provider for a Software solution, there is nothing illegal going on here, the only thing that matters is the path the money goes, not the tools that are used.

keep in mind, regulators are "reactive" not "proactive" meaning once there is a major complaint against a bad player using cTrader Copy, regulators will have a look at the system and determine its faith after the damage was done.

Hi there, i would actually disagree, there are questions with answers and i will try to make it very simple.

-Do you provide Financial advice? No! Then you are not required to obtain any licenses.

-Do you manage investors funds? No! Then you are not required to obtain any licenses.

-Do you teach any financial services? No! Then you are not required to obtain any licenses.

-Do you sell or promote any financial materials such as signals or education? No! Then you are not required to obtain any licenses.

Then they ask you, what do you provide? I sell and buy financial instruments with a regulated broker as my personal investments however my profile is open to the public for performance tracking, oh Great! what is the benefit of opening your profile to the public? Well, if they wish to copy my personal ideas, they can do so without any upfront fees. Its completely Legal! 

Cheers!

swingfish
09 Jan 2023, 04:58

RE: RE:

HV_OFFICIEL said:

Hi there, i would actually disagree, there are questions with answers and i will try to make it very simple.

-Do you provide Financial advice? No! Then you are not required to obtain any licenses.

-Do you manage investors funds? No! Then you are not required to obtain any licenses.

-Do you teach any financial services? No! Then you are not required to obtain any licenses.

-Do you sell or promote any financial materials such as signals or education? No! Then you are not required to obtain any licenses.

Then they ask you, what do you provide? I sell and buy financial instruments with a regulated broker as my personal investments however my profile is open to the public for performance tracking, oh Great! what is the benefit of opening your profile to the public? Well, if they wish to copy my personal ideas, they can do so without any upfront fees. Its completely Legal! 

Cheers!

that's correct! ;)