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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3493
Experience:  Solicitors 2 years plus PQE
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Do I need to be licensed in the UK to trade foreign exchange

Customer Question

Do I need to be licensed in the UK to trade foreign exchange on behalf of others who have signed a limited power of attorney?
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,

Thank you for your question and welcome.

My name is AJ and I will assist you.

Providing foreign exchange services and dealing with client monies is a regulated activity in accordance with the Financial Services and Markets Act 2000. To carry out even the sale of foreign currency you would need at the very least a limited permission or authorisation from the Financial Conduct Authority.

Simply having a limited power of attorney is not necessarily a way around the problem as you are still selling a service. You are also potentially making your self and highly susceptible to money laundering issues.

I look forward to hearing from you.

Kind regards

AJ
Customer: replied 2 years ago.

I would not be handling any client monies. My broker handles all that side of things. I would only be trading, I trade for myself and my trades are copied to others accounts. I would receive a commission based on performance.

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

You are still trading with client money even if it is under a power of attorney.

If you are being employed by your broker on a commission basis then surely it will be up to your broker to fulfill the regulatory requirements.

Are you doing this for friends and family?

Kind regards

AJ
Customer: replied 2 years ago.

My broker is based in Australia and is fully regulated by ASIC under the Australian Financial Securities License (AFSL 385620). It is they who have suggested I trade a MAM (Multi Account Manager) account. I just want to be sure I'm not braking any UK laws by doing so as I am based in the UK

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

So are you instructing your clients to send money to your broker in Australia?

Kind regards

AJ

P.S I have to log off briefly but will be back by 2pm at the latest?
Customer: replied 2 years ago.

No.

The broker explained it to me thus:

"You are the trader and it is your MAM. Clients will not be able to contact you directly and will go through us if they have any questions. From our side we would simply be facilitating connecting clients to your MAM as an executing broker."

They also said I would need to ascertain what the laws are in the UK in regards to licensing and trading on behalf of others.

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

The laws in the UK are as follows:
1. Trading on behalf of others in regards to a speculative risk like this is a regulated activity under the Financial Services and Markets Act 2000. You will need authorisation from the Financial Conduct Authority;
2. You will also need to verify that you are not some how facilitating any money laundering activity. Therefore you would need identification and proof of address from any prospective client.

I look forward to hearing from you.

Kind regards

AJ

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