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I was told the CBSX firms cannot "hang" the 7 because their SRO is the CBOE and not FINRA, so apparently there is some question regarding the issue. My guess is they'll come up with the new proposed exam, and those who are members of a CBSX firm will be required to take it, even if they...

Ok thanks for clarification. Sure, you can always use proceeds from settled trades.

Well said. The best value I got from trading a prop account was "forced discipline", which has enhanced my personal risk management skills while trading a retail account.

Absolutely, and although there are firms similar to what you're describing, they are geared for recent college grads and not experienced traders. This is also why some prefer the Canadian model, where the trader places zero risk capital, gets training, and gives up a larger percentage of...

Yes, however your example stipulates that the prop firm is going to allow the trader, "Billy", to incur a drawdown of 475k of the Class A partner's risk. That doesn't sound like proper risk management of the prop firm. I traded in a firm where the daily risk was limited to 5% of the trader's...

Ok, I understand what you are saying. When I write about "risk" I'm making a reference to the prop firm taking on risk from the Class B member. Can you cite an example of that? If 50 prop firms have become 5, then why is that? If it's the trader's blowing up their own accounts, then how does...

Excellent post, and it's important to understand the concept of "settled" cash balance. If you buy a security using your cash balance in a retail account and hold overnight, you CANNOT "churn" the cash once that security is sold due to Reg T rules, which makes you wait for "T+3" (trade day plus...

Have you seen the Bright's "Class A" member capital from the latest financials or SEC focus report? I don't believe Don "has" to do any of these things. Prop firms exist because the cost to acquire "all the small traders" is low compared to what a hedge fund spends to recruit talent...

The HFT robots want to push it to Dow 12k and S&P 1300, and they'll probably get it tomorrow at the open.

Thanks, that's good to know. Perhaps it has something to do with the new proposed exam requirement for CBSX firms: http://www.sec.gov/rules/sro/cboe/2010/34-63314.pdf

Beyond what is available in a SEC public document and posts made on the net, it's doubtful if any owner of a prop firm is just going to hand over their margins in an Excel spreadsheet to someone who poses the question on a thread.

Maverick74, Most who view these boards will get a general idea of where the firm's money is made: mark-ups on commission, profit-splits, interest/haircuts charged for overnights (for the few props that allow it), and fees charged for education. From the trader's perspective, it boils down...

You make some good points regarding the business model of wall street, however I can assure you that there are LOTS of people willing to pay for education. Have you ever been to a Trader's Expo? (there's one coming up in Manhattan in Feb), or wait until the west coast has it later in the year...

Sounds very plausible. The airlines did this when they started charging for meals and baggage, even after they got your loyalty in their frequent flyer program. Wall Street relies on "transaction based compensation" to flourish, and fees are simply part of the equation, in whatever form it...

Perhaps the original post for this thread who wants to run a prop firm will find this discussion useful. I recall Schwab had per share pricing when they had CyberTrader, and then promptly went back to the $8 flat rate model. Zecco used to heavily promote the "zero cost" commission model...

I'm also in the process of upgrading my router (and my cable modem). I was having issues with dropped connections, which is not cool especially when I'm in a trade. The cable guy suggested I purchase a "Docsis 3.0" modem in addition to a new router. I was using "Docsis 2.0" which was...

How's this model: Team Trading charged around $10,000 to 30 to 40 traders a week, and did that TWICE A MONTH! Prop firms have obviously taken notice, and have started selling education, or shall I say, "selling the dream", lol! Seriously, I'm one who paid a dear sum for the training, and I...

Thanks for the prompt reply and analysis, it does seem that there is a trending shift even from the registered firms to offer "education and training", as I've been noticing firms who relied on traders to generate income are now changing their model to generate revenues up front. Sort of like a...

The lock up on funds at a CBSX registered firm is an SEC rule 15c3-1, whereby the firm must treat its capital contributions as "firm capital" otherwise it's treated as a liabilty if they hold it for less than a year. So it helps the firm with meeting its net capital reserve requirements...

Please explain. The Canadian props charge as low as 20 cents per 1,000 for the high volume "rebate based" traders, whereas firms such as Bright are $4 per 1,000 on average (Don can correct this if I'm mistaken, but that's what I believe he said was the average rate of what his traders pay...