Launch Checklist: Algorithmic Trading Platform

Pre-Launch Compliance Roadmap

Launching an algorithmic trading platform requires navigating a complex web of regulatory requirements, infrastructure decisions, and operational preparations. Miss a critical step, and I could face regulatory enforcement, user issues, or technical failures on day one.

This comprehensive checklist covers everything from entity formation to day-one operational requirements. I'll work through three distinct phases: Pre-Launch, Launch Preparation, and Post-Launch.

⚠ Timeline Reality Check

A compliant algo trading platform launch typically requires 3-6 months minimum. If someone promises faster, I should question what's being skipped. Rush compliance, and I'll pay for it later in enforcement actions or business restrictions.

Typical Launch Timeline

Months 1-2: Entity & Structure

Entity formation, regulatory path determination, initial counsel engagement

Months 2-4: Registration & Documentation

RIA/CTA registration, compliance manual, terms of service, risk disclosures

Months 3-5: Infrastructure & Testing

Broker partnerships, technology stack, security audits, beta testing

Months 5-6: Final Prep & Launch

Marketing materials review, onboarding processes, day-one monitoring

1. Entity Formation & Structure

The legal structure I choose impacts regulatory requirements, tax treatment, liability protection, and future fundraising options.

Pre-Launch Entity Setup

Choose Business Entity Type LLC (most common), C-Corp (if raising VC), Delaware vs home state analysis. Consider tax treatment (pass-through vs corporate) and future fundraising needs.

Register Entity in Chosen State File formation documents, obtain EIN, draft operating agreement or bylaws. Delaware offers well-established corporate law; home state may be simpler.

Open Business Bank Account Separate business finances from personal. Required for regulatory compliance and professional operations.

File Beneficial Ownership Information (BOI) Report FinCEN Corporate Transparency Act requirement. File within 30 days of entity formation. Failure to file can result in significant penalties.

Consider Multi-Entity Structure Separate entities for advisory services, technology platform, and proprietary trading can provide liability protection and regulatory flexibility.

💡 Entity Structure Strategy

Many platforms use a Delaware C-Corp as the parent company (easier for fundraising) with a subsidiary LLC for advisory services (pass-through taxation, simpler RIA registration). This hybrid approach balances investor appeal with operational efficiency.

2. Regulatory Registration Requirements

Determining which registrations I need is the most critical compliance decision. Get this wrong, and I'm operating illegally from day one.

Pre-Launch Registration Analysis

Determine RIA vs CTA vs BD Requirements Am I providing investment advice (RIA)? Trading futures/commodities (CTA/CPO)? Effecting securities transactions (BD)? Different activities trigger different registrations.

Engage Securities Counsel Experienced securities attorney to guide registration process, review business model, and draft compliance documentation. Budget $10K-$50K for initial work.

RIA Registration: File Form ADV If managing >$100M or required by state, file with SEC. If managing <$100M, file with state securities regulator. Includes Part 1 (regulatory), Part 2A (brochure), Part 2B (personnel), CRS (client relationship summary).

CTA/CPO Registration: NFA Membership If providing commodity trading advice or managing commodity pools, register with CFTC via NFA. File Form 7-R, pass Series 3 exam, complete NFA membership application.

Series Exams for Principals RIA: Series 65 or 66 (or CFP/CFA). CTA: Series 3. BD: Series 7, 24, 63. Schedule exams early—they take time and must pass before registration approval.

State Notice Filings Even SEC-registered RIAs must file notice in states where they have clients. CTA/CPOs also require state registration in some jurisdictions.

FinCEN MSB Registration (if applicable) If handling customer funds or crypto assets, determine if Money Services Business registration required. State money transmitter licenses may also apply.

Registration Type	Timeline	Cost	Key Trigger
SEC RIA	45-90 days	$10K-$50K	Investment advice + compensation
State RIA	30-60 days	$5K-$25K	Investment advice + <$100M AUM
CTA/CPO	60-90 days	$15K-$40K	Commodity trading advice/pool operation
Broker-Dealer	6-12 months	$150K-$500K+	Effecting securities transactions
State MTL	3-12 months per state	$50K-$200K per state	Holding/transmitting customer funds

⚠ Registration Before Operations

I cannot provide advisory services, accept client funds, or execute trades on behalf of clients until my registration is approved. "Beta testing" with real money is still regulated activity. No soft launches in this industry.

3. Risk Disclosures & Documentation

Comprehensive, clear disclosures protect both my users and my business. Inadequate disclosures are a top SEC examination finding.

Pre-Launch Legal Documentation

Draft Terms of Service User agreement covering account creation, acceptable use, termination rights, dispute resolution. Must comply with securities law limitations on waiver and arbitration.

Create Risk Disclosure Document Comprehensive disclosure of algorithmic trading risks: system failures, market volatility, past performance not indicative of future results, potential for total loss.

Draft Investment Advisory Agreement (if RIA) Client agreement specifying services provided, fees charged, termination provisions, and regulatory disclosures. Required for RIAs.

Prepare Form ADV Part 2A Brochure Plain English disclosure of advisory business, fees, conflicts of interest, disciplinary history. Must be delivered to clients before or at time of engagement.

Create CTA Disclosure Document (if applicable) CFTC-required disclosure for commodity trading advisors. Must include performance data (if available), risk factors, fees, conflicts.

Draft Privacy Policy Gramm-Leach-Bliley Act (GLBA) requires privacy notices for financial institutions. Cover data collection, use, sharing, security measures, user rights.

Prepare Algorithmic Trading Specific Disclosures Explain algorithm methodology (without revealing proprietary details), backtesting limitations, hypothetical performance disclaimers, technology risks, execution risks.

Create Conflicts of Interest Disclosure Disclose any payments from brokers (payment for order flow), proprietary trading that may conflict with client trades, personal trading policies, compensation arrangements.

⚠ Hypothetical Performance Disclosure

If showing backtested or simulated results, I must include prominent disclaimers: "Hypothetical performance results have inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and actual results subsequently achieved."

4. Technology Infrastructure Compliance

My technology stack must support compliance obligations: recordkeeping, audit trails, cybersecurity, and business continuity.

Pre-Launch Technology & Security

Implement Recordkeeping Systems RIAs must maintain records of all client communications, transactions, advice given. Design database schema and storage systems to capture required records automatically.

Build Audit Trail Capabilities Every trade, every algorithm parameter change, every user action must be logged with timestamps. Regulators will ask for detailed reconstruction of events.

Establish Cybersecurity Program SEC and state regulators require written cybersecurity policies. Implement encryption, access controls, penetration testing, incident response plans.

Conduct Security Audit / Penetration Test Third-party security assessment before launch. Identify vulnerabilities in API security, database access, user authentication, data transmission.

Draft Business Continuity Plan What happens if servers go down? If API keys are compromised? If key personnel are unavailable? Document backup systems, failover procedures, emergency contacts.

Implement Algorithm Testing & Validation Paper trading environment, backtesting validation, risk limit testing. Never deploy untested algorithms to live client accounts.

Set Up Error Handling & Kill Switches Automated circuit breakers if algorithm behavior becomes erratic. Loss limits, position size limits, exposure limits per account.

Configure Performance Monitoring Real-time dashboards for algorithm performance, system uptime, trade execution quality, slippage, error rates.

💡 Regulatory Technology Requirements

SEC Rule 204-2 (Books and Records) requires RIAs to maintain emails, client communications, trade confirmations, and advisory materials for 5 years (first 2 years in easily accessible location). Plan storage and retrieval systems accordingly.

5. Broker/Dealer Relationships

Unless I'm a registered broker-dealer myself (unlikely for most algo platforms), I need partnerships with BDs for trade execution and custody.

Pre-Launch Broker Partnerships

Identify Compatible Broker-Dealers Not all brokers support algo trading platforms. Look for: API access, custodial services, RIA/CTA-friendly, reasonable commission structure, good execution quality.

Review Broker API Terms & Conditions Key issues: liability for system failures, data ownership, rate limits, termination provisions, indemnification, insurance requirements. Don't auto-accept standard terms.

Negotiate Commission Structure Per-trade commissions, volume discounts, monthly minimums. For algo platforms with high trade volume, negotiate aggressively.

Establish Custody Arrangements Who holds client funds and securities? If RIA has custody, SEC Rule 206(4)-2 requires surprise examinations by independent accountant. Most platforms use qualified custodian instead.

Set Up API Keys & Authentication Secure key management, key rotation policies, separate keys for production vs testing, access controls for who can generate/revoke keys.

Test API Integration in Sandbox Environment Validate order routing, execution reporting, position reconciliation, error handling before connecting to live markets.

Document Trade Authorization Process How do clients authorize the platform to trade on their behalf? Limited power of attorney (LPOA), advisory agreement, broker's discretionary authorization forms.

Plan for Backup Broker Relationship What if primary broker terminates API access or goes out of business? Consider secondary broker for business continuity.

Broker Feature	Why It Matters	Questions to Ask
API Quality	Reliable, low-latency execution	Uptime SLA? Rate limits? WebSocket support?
Custodial Services	Avoid RIA custody rule requirements	Are they a qualified custodian? Client account segregation?
Commission Structure	Impacts platform economics	Per-trade fee? Volume discounts? Hidden fees?
Asset Coverage	Support for intended trading strategy	Stocks, options, futures, crypto? International markets?
RIA/CTA Support	Many brokers don't work with advisers	Do they have RIA onboarding process? Master account structure?

6. Marketing Compliance

SEC Marketing Rule (Rule 206(4)-1), CFTC rules, and state regulations impose strict limitations on how I can advertise investment performance and services.

Launch Prep Marketing & Advertising

Review SEC Marketing Rule Compliance RIA Marketing Rule (2021) allows testimonials and past performance with proper disclosures. Must maintain records of all marketing materials.

Prepare Performance Presentation Methodology If showing performance, must be based on actual results (not backtests) unless clearly labeled hypothetical with appropriate disclaimers.

Draft Social Media Policy Twitter, Reddit, YouTube, LinkedIn posts are all "advertisements" under SEC rules. Establish review/approval process before posting.

Create Marketing Materials Archive Must retain all advertisements for 5 years. Set up system to capture and store website snapshots, email campaigns, social media posts, video content.

Establish Testimonial Disclosure Process If using client testimonials, must disclose if compensation was paid, conflicts of interest, that testimonial may not be representative of all clients.

Review All Website Content for Compliance Website is an advertisement. Check for prohibited claims ("guaranteed returns"), proper risk disclosures, accurate fee descriptions, current regulatory status.

Plan Content Marketing Strategy Educational content (blog posts, videos, guides) can be powerful marketing if done compliantly. Avoid specific security recommendations that cross into advice.

⚠ Prohibited Claims

I cannot claim or imply: (1) Guaranteed returns or profits, (2) No risk of loss, (3) Government approval/endorsement, (4) Past performance will continue, (5) Algorithm is "perfect" or "never loses." These are red flags for regulators and grounds for enforcement action.

7. Day-One Operational Requirements

Once registration is approved and technology is built, there are critical operational procedures I must have in place before accepting the first client.

Launch Operational Readiness

Implement Client Onboarding Process Account application, identity verification (KYC), suitability assessment, risk tolerance questionnaire, investment objective determination.

Establish Client Communication Procedures How will I communicate with clients? Email? In-app messaging? Phone? All must be captured and archived per recordkeeping rules.

Create Quarterly/Annual Reporting Templates RIAs must provide periodic performance reports. Design templates now for consistency and efficiency.

Set Up Fee Billing System How will fees be calculated and collected? Automated billing from client accounts? Invoicing? Must match fee structure disclosed in Form ADV.

Implement Trade Confirmation Process Clients receive trade confirmations from broker, but I should have internal system to review and reconcile all trades daily.

Establish Complaint Handling Procedures Written policy for receiving, investigating, resolving client complaints. Maintain complaint log. Some complaints must be reported to regulators.

Create Daily Operations Checklist Market open procedures, intraday monitoring, market close reconciliation, end-of-day reporting. Don't rely on memory—document repeatable processes.

Set Up Compliance Calendar Track regulatory filing deadlines (Form ADV annual update, Form PF if applicable, state renewals), internal review schedules, training requirements.

Designate Chief Compliance Officer RIAs must have a CCO responsible for administering compliance program. Can be founder initially, but must have authority and resources to be effective.

Obtain Required Insurance Errors & Omissions (E&O) insurance for RIAs, Cyber liability insurance, potentially Fidelity bond if required. Shop policies before launch.

8. Compliance Program Essentials

A written compliance manual is legally required for RIAs and CTAs. It's also my operational blueprint for staying compliant.

Pre-Launch Compliance Infrastructure

Draft Comprehensive Compliance Manual Written policies and procedures covering: fiduciary duty, conflicts of interest, personal trading, gifts & entertainment, marketing, recordkeeping, privacy, cybersecurity, business continuity.

Create Code of Ethics SEC Rule 204A-1 requires RIAs to adopt code of ethics. Must include: standard of conduct, personal trading reporting, pre-clearance of certain trades, annual certification.

Establish Personal Trading Policy Rules for when I and my employees can trade personal accounts. Blackout periods, pre-clearance requirements, reporting obligations. Prevent front-running client trades.

Document Annual Compliance Review Process RIAs must conduct annual review of compliance program effectiveness. Create review checklist and documentation template now.

Set Up Employee Training Program Initial training for all employees on compliance policies, annual refresher training, specialized training for roles with regulatory responsibilities.

9. Ongoing Compliance Obligations

Registration is not one-and-done. I have continuous filing, reporting, and monitoring obligations.

Post-Launch Ongoing Requirements

Form ADV Annual Update (RIAs) Must update Form ADV at least annually within 90 days of fiscal year end. Update more frequently if material changes occur.

Form PF Reporting (if applicable) RIAs managing $150M+ in private fund assets must file Form PF quarterly or annually depending on fund size. Complex reporting—budget compliance resources.

NFA Annual Questionnaire (CTAs/CPOs) Commodity trading advisors must complete annual questionnaire and pay annual dues to NFA.

State Renewal Filings State-registered RIAs must renew registration annually. Renewal fees, updated questionnaires, continuing education requirements vary by state.

Quarterly Compliance Reviews Don't wait for annual review. Quarterly check-ins on: new regulatory developments, algorithm performance vs disclosures, marketing materials accuracy, personal trading compliance.

Client Relationship Summary (CRS) Updates Must deliver updated CRS to clients whenever material changes occur. Review CRS quarterly for accuracy.

Cybersecurity Incident Reporting SEC rules require prompt reporting of significant cybersecurity incidents. Have incident response plan and reporting procedures ready.

Common Pre-Launch Mistakes to Avoid

Learn from others' failures. These are the mistakes that consistently trip up new algo trading platforms:

⚠ Top 10 Launch Mistakes

1. Starting operations before registration approval. "Beta testing" with real client money is still regulated activity.

2. Using backtested performance without proper disclaimers. SEC will view this as misleading advertising.

3. Failing to disclose conflicts of interest. Payment for order flow, proprietary trading, affiliate relationships must all be disclosed.

4. Inadequate recordkeeping systems. Can't reconstruct what happened during an algorithm malfunction? That's a regulatory violation.

5. No written compliance manual. Required by law, and you'll be asked for it in first examination.

6. Accepting custody without custody rule compliance. Surprise examination requirement is expensive and complex.

7. Making "no risk" or "guaranteed returns" claims. Automatic enforcement action.

8. No testing environment for algorithms. Deploying untested code to live client accounts is reckless and potentially violates fiduciary duty.

9. Single broker dependency. If broker terminates API access, entire business shuts down.

10. Underestimating ongoing compliance costs. Budget for continuous compliance, not just launch costs.

Launch Budget Planning

Here's a realistic budget breakdown for launching a compliant algo trading platform:

Category	Low End	High End	Notes
Entity Formation	$2,000	$5,000	Legal fees, state filing fees, BOI compliance
Securities Counsel	$10,000	$50,000	Registration, compliance manual, document review
RIA/CTA Registration	$5,000	$15,000	Filing fees, exam costs, state registrations
Compliance Program	$3,000	$10,000	Manual, policies, templates, training materials
Technology Infrastructure	$15,000	$100,000+	Development, hosting, security, testing (highly variable)
Insurance (E&O, Cyber)	$3,000	$15,000	Annual premiums, varies by coverage limits
Broker Integration	$5,000	$20,000	API development, testing, legal review of agreements
Marketing & Website	$5,000	$30,000	Compliant website, marketing materials, content creation
Accounting & Tax Setup	$2,000	$8,000	Accounting systems, tax planning, initial filings
FIRST YEAR TOTAL	$50,000	$250,000+	Plus ongoing operational costs

💡 Ongoing Annual Costs

After launch, budget $20K-$75K annually for: compliance consulting, insurance renewals, state registration renewals, technology maintenance, accounting/audit, continuing education. Scale increases with AUM and complexity.

Final Pre-Launch Checklist

Use this as my final review before flipping the switch to live operations:

Final Review Go/No-Go Checklist

Registration Approved RIA/CTA registration is active and effective, not pending. State notices filed where required.

All Legal Documents Finalized Terms of service, advisory agreements, risk disclosures, Form ADV brochure all reviewed by counsel and ready for delivery.

Broker Relationships Active API access confirmed working, custody arrangements documented, commission structure agreed in writing.

Technology Tested Algorithm performance validated in paper trading, security audit completed, recordkeeping systems operational, kill switches tested.

Compliance Program Implemented Compliance manual approved, Code of Ethics signed by all personnel, training completed, CCO designated.

Insurance Coverage Active E&O and cyber liability policies in place with appropriate coverage limits.

Marketing Materials Reviewed Website, social media, email templates all compliant with advertising rules. Hypothetical performance disclaimers in place.

Onboarding Process Ready Client application forms, KYC procedures, suitability assessments, account authorization forms all ready to go.

Operational Procedures Documented Daily operations checklist, complaint handling procedures, incident response plan, business continuity plan all written and accessible.

Compliance Calendar Set All regulatory deadlines entered, reminders configured, responsible parties assigned.

✅ Ready to Launch

If every item on this checklist is complete, I'm in a strong position to launch compliantly. That said, compliance is not a one-time achievement—it's an ongoing commitment. Stay vigilant, keep learning, and when in doubt, consult with experienced securities counsel.

Disclaimer: This checklist provides general guidance for launching an algorithmic trading platform. Specific requirements vary based on business model, assets under management, jurisdiction, and regulatory interpretations. This is not legal advice. Consult with qualified securities counsel before launching any regulated financial services business.