Anyone want to shares future trading infrastructure cost with me?

nitro said:
I don't blame you for trying this. I was considering it myself. I am interested in getting a 1/4 rack in NJ Equinix, London Equinix, and Chicago Aurora.

Problem is, as others have stated, it is complicated to try this. I wish someone would crowdfund such an idea though. The motif would not be profit, just sharing costs to leverage each other. Again, problem is, how does it work when the costs are recurring with a probable yearly contract.
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This is a good idea -- someone should create an organization that has access to get data from and send trades to these different exchanges and allow people to trade through this organization without comingling accounts so as to share the costs of the underlying infrastructure, exchange agreements, clearing, and so forth so that there's better rates than if everyone did it individually. How do you determine what each individual trader's share of the infrastructure costs should be? Should it be based on a flat fee (infrastructure costs / number of participants)? What do you do when a single user is using a substantially disproportionate /amount of the infrastructure resources? Should the fee be based on how much they actually utilize the system (ie their volume) -- you know, kind of like a broker charges commission? ;)

I understand what you're saying, but it's basically the suggestion is to set up a brokerage, but do so in a way that it has lower commissions. When you consider the infrastructure and regulatory costs (particularly when handling 3rd party people's money rather than strictly the organization's own money / an individual) I think you'll find that the commissions that need to be charged to the group members may end up being higher than an established broker. R&D on a system to manage other people's money while keeping the account values separate is a lot of extra development and that development cost needs to be recouped. There's also likely to be ongoing regulatory costs.

Don't underestimate the infrastructure required to comply with regulatory/auditing requirements when handling other people's money (vs strictly your own). How do you deal with bugs in the system that screw up trades or potentially incorrectly credit/debit an account? Sure the simple answer is to write good software, but inevitably a bug will happen -- look at Knight's flash crash from a few years ago. It's more a matter of limiting the effects of a bug, which in itself is a whole project.

I think we can all agree that we'd prefer a lower cost brokerage, but I think it's too niche to get crowd funding and the way to truly spread the costs is to have a large number of users. Would you trust your money to a brand new brokerage without a tested platform and history of not screwing their customers?
 
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