Everything you need to know about PAMM accounts
What is PAMM?
Please note: To be considered for a PAMM Manager partnership with Axi, you are required to be licensed by the FCA.
PAMM (Percentage Allocation Management Module) accounts allow fund-licensed managers to manage multiple trading accounts from a single account, without having to create a separate investment fund. The performance (profits and losses) of a PAMM account manager will be distributed among the managed accounts.
A PAMM account involves the allocation of funds by a client (investor) to another client (trader) who uses the same broker. A single trader (PAMM master) can host up to as many investors (PAMM followers/children) as possible.
How a PAMM account works
Traders in a PAMM account are called fund managers or masters, and investors are called followers/investors/children; they follow their master’s trading strategy or portfolio allocation.
The master has limited power of attorney and can act on behalf of their followers. The master/trader typically gets paid through a performance fee and/or management fee. Each account will be subjected to profit sharing (also known as performance fee), tabulated for each calendar month on the first week of the following month.
A master/trader can simultaneously manage an unlimited number of investor accounts.
IMPORTANT: PAMM followers won't have real-time visibility into their trades; instead, they will experience either profit or loss based on the subscribed trading strategy. Additionally, they retain the flexibility to withdraw their funds at any time.
Key considerations regarding a PAMM account
PAMM accounts are designed to offer flexibility and control:
- In a PAMM setup, clients can unsubscribe from the master strategy at any time via the PAMM portal, and performance fees will be automatically deducted
- Trades viewed by PAMM children/investors are delayed
- The PAMM master holds actual cash invested by investors, facilitated by an internal transfer between the master and investor
- If a PAMM investor wants to trade independently, they are free to do so by opening a sub-account