Hey @nithin
Just wanted to know an approach to help traders get funded, as i am creating a paper trading platform for traders to evaluate themselves by achieving a specified target and they lose the evaluation fee upon losing a specified drawdown, while we charge them only to evaluate as a tutor company and provide knowledgeful insights, and register myself as a AP where we provide funds in form of loans at 0% interest for skilled traders where as a company we bare a specified drawdown set for the traders as loss upon completion of evaluation, POA signed by both mutual parties and money sent directly to broker account with the withdrawal option held by an AP where the broker and i(AP) have mutual understanding about the same, i connect them with my broker to earn brokerage as well as demat account opening fees, where as a sub broker i will not be charging a penny on the loan nor profit sharing from the trader because the regulation does not allow as i will be needed to take RIA registration if charge them,
my question is will i still be in the grey area while executing this business
do i need any kind of registration to be done apart from an AP because i am not provide any direct buy/sell to traders nor am i trading on their behalf, we are just providing a knowledgeful journal about their trading history
do i need to register as a NBFC if i do provide loan in the companies name
can we have an option for an AP where he can convince the broker to set a certain amount as margin call or have his client to stop trading after a certain percentage of loss reached in their account with broker
Dark grey.
You can’t get into this like that POA or block people from withdrawing money to their accounts. Lending money as an AP is also not allowed by SEBI.
You will need NBFC to lend, but NBFC can’t lend money for F&O, intraday trading, etc.
A customer could request the broker, but it is hard for a broker today to customize this. The risk management rules are set at the overall level, so will be hard to customize unless it is a very small broker.
Maybe you can check this thread.
Thank you so much for your knowledgeable insights it truly feels like SEBI has a strict and thin line to protect its investors, and its there for a reason, flexibility in Indian stock markets are really hard, would have to find a legal and effective way to help skillful traders with kick starting their trading journey with access to capital apart from joining a prop firm or PMS which is again a tedious process for application in India,
My last question was, is there any other way where traders can access capital apart from personal loans or any credit related facility, as it brings a psychological effect on traders to pay out the loan as well as make a profit for living, which can make them to take wrong decisions in the process, because i believe Retail traders with good intent, profitability and who run its as business deserve a good investor who could back them up in a long run for mutual benefit.
Thanks again @nithin that was a quickest response from a CEO that i have ever received, which truly shows your dedication towards what you do.
Folks with capital can hire retail traders to work for them. This is really the only way someone can access higher capital, apart from starting a cat 3 AIF (hedge fund) which I have mentioned in the post shared earlier.