Trading authority is the right to buy and sell assets within a fund's accounts; withdrawal authority is the right to move assets out of them. Separating the two, so that the manager can trade but cannot withdraw, is the arrangement institutional investors expect.
In a badly structured fund the manager holds both powers, which means investor protection depends entirely on the manager's honesty. In a well-structured fund, withdrawal from custody or from exchange sub-accounts requires instruction from the administrator or the fund's directors under documented controls, typically to whitelisted addresses or accounts only.
This single control is the most important answer in operational due diligence, and the one allocators verify directly with the custodian.
On POD the manager has trading authority over the fund's venue and custody accounts and never withdrawal authority. Asset movements out of the fund run through the platform's controls, documented in the DD pack.
Get in touch for a demo
