VIC Stock trading algorithms - does it constitute financial advice?

[NinjaFlyer]

I have been developing algorithms and custom screeners for trading shares based on Technical Analysis . I am using either TradingView for building strategies and python based discord bots for custom screeners. I have obtained handful of followers and also getting lots of request to develop custom trading algorithms. At present, I am not really entertaining them but thinking of turning this into freelancing + offer the trading strategies I personally use to others based on subscription.

My major questions before starting this are:

1. Does selling these strategies constitute financial advice? TradingView disclaimer says this - Disclaimer. Hence, I believe anything developed and published on TradingView cannot be considered as financial advice.


If I turn this into side business, my intention is to sell this to traders who understand technicalities and not to people who want a blackbox which generate buy and sell signals. I also intend to sell them as software with full description of how they work instead of financial advice. Does adding a meaningful disclaimer in my website makes it clear or do I need to do anything more?

2. I am trading shares as trader and on ABN. Adding a business on this will also help me reduce tax on my trading income as I am not expecting any income to start with. But, I will involve my wife for managing this and can divert some of my share trading income to her as pay. I do not want to form family trust as I want to keep the option to reduce tax from my PAYG income if my sharetrading results in loss in any financial year. This may not happen, but, it is very much possible. Plus, this also enables me to spend more on algo development infrastructure with tax deductions.

Question here is, is it possible to do this on ABN without registering a company but still using a generic business name. Or if we are using business name, we are supposed to register company?

Appreciate any insights into this.

PS: I requested few nearby lawyers to assist in this regard. But, they all said, this is too specific and they don't have expertise.

I'm pretty familiar with TradingView... I've never seen anyone there disclose an advisor license number or anything similar. If you're simply providing a tool for folks to plug their own data into how can that be advice?

 

[voldemort]

Because it has logic in it which generates long and short signals. My accountant said that anything which has buy and sell signals likely constitute financial advice (may be generic and not personal). He too asked me to check with lawyer anyway.

 

[Docupedia]

From the document you shared, it is clear that it doesn’t constitute personal advice. To be considered as personal advice, you need to get personal details such as age, capital details etc before expressing opinion or analysis. Hence the algorithm clearly falls under generic advice.

Actually, not according to ASIC. From RG244:
"Advice may be regarded as personal advice if it is presented in a way that means a reasonable person might expect you to have considered one or more of the client’s objectives, financial situation or needs".
and
"If you have personal information about a client, this will not, by itself, mean that the general advice you give them is personal advice."

As I said, this area is exceedingly complex. You cannot read just one regulatory guide and get the answer. I know I'm pulling out individual bits and pieces - but that's merely to demonstrate that you have to dig deeper. In financial services it is usually best to assume the worst case scenario unless and until you can conclusively negative it after considering all relevant material. It is not worth getting wrong - ASIC will aggressively prosecute if they think you're doing the wrong thing.

 

[Docupedia]

So a guy at the water cooler at work opines that XYZ seems to be a good investment and he needs a license? No. Someone on LinkedIn describes what they are doing with their investments and gives a general opinion of being bullish or bearish on XYZ in their own portfolio and they need a license? No. It all comes down to the framing... if you are describing your own actions you don't need a license so frame it that way.

No, because you missed what I said. I expressly said: "...in a professional context.". So if you're giving financial advice to someone where they could reasonably expect that you're doing it as a commercial undertaking - you likely need a licence. If you're talking to Steveo at the water cooler (Steveo being a mail clerk) and he's rabbiting on about what shares you should buy, then probably not.

 

[voldemort]

Makes lots of sense. Thanks very much Docupedia. I will try to find some lawyers who can help.

 

[NinjaFlyer]

Makes lots of sense. Thanks very much Docupedia. I will try to find some lawyers who can help.

You're going to be the only dude on TradingView with an ASIC license.... but ok.

 

[voldemort]

You're going to be the only dude on TradingView with an ASIC license.... but ok.

Do you think the others who are selling their strategies and indicators do not have license? Posting without the intent of selling is fine I believe as we are just being there as blogger. But, when you are intending to sell it as business, I am just wondering if it has more repercussions.

Well, may not go for license. If a lawyer thinks that you need to have license, I will drop the plan of making it as business and continue with trading shares.

 

[christense]

Now there are so many different algorithms. It would help if you read books about trading; you will find many exciting things there. When I started my career in trading, I wanted to immediately invest a large amount of money in stocks and follow them, but it's wrong to do this. It is good that I met intelligent and experienced people on my way, who gave me advice because I am now earning good money. I was told that patience is the essential quality in this business. I was also advised to read books about economics and trading in general. All these tips helped me a lot. Also, I think you need to be careful with stock trading apps because there are many scammers right now.