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becoming your own broker dealer
- Thread starter Sky123987
- Start date
Quote from TM_Direct:
sure it hurts them but they had been struggling before that...They gave up the clearing side and outsourced it to ADP and have been trying to find ways to create profits...they have such thin margins that any slow down in the market or economy puts them in peril.....
Those massive writeoffs weren't due to their brokerage business - period. I think you ought to keep the conversation on the prop/LLC model. There's other sources of profits at a mainstream brokerage like internalization that aren't part of the prop model and make this an apples/oranges comparison.
i think i've seen before were eric p has a retail account so the llc going out of bus is not a concern for him are for many who self fund. this is a crazy argument. if i'm doing 30 mil vol a month the difference between even .001 and .002 is an incredible 30k a month are 360k a year. take don's .004 and you're talking 90k a month are 1 mil a year of commission savings. I THINK WERE THIS DISCUSSION GOT OFF TRACK IS PEOPLE LIKE TM DIRECT ARE DON ARE IMPLYING THAT JUST BECAUSE A FIRM CHARGES MUCH LESS ITS DANEGEROUS ARE INFERIOR. THATS BS. understand don clears gs so just his clearing fee is probably .0015 per share are 5-6 times more than a self clearing genesis.don is a pround owner of a well respected prop firm and he will always try to justify why his rates are 2 times the avg for high vol guys. but as eric p says the argument don't cut it
Quote from Shreddog:
Those massive writeoffs weren't due to their brokerage business - period. I think you ought to keep the conversation on the prop/LLC model. There's other sources of profits at a mainstream brokerage like internalization that aren't part of the prop model and make this an apples/oranges comparison.
Actaully...You couldn't be more wrong...thats is another problem for etrade and some prop groups.....MArgin and Credit interest are one of the biggest $$$ makers....etrade charges nothing whereas some of the larger ones charge a lot more....in Prop outfits they don't get the benefit of margin interest rebates....or credit interest rebates...Generally most clearing firms do not pay credit interest to DT accounts...some do but its not much....also the amoutn of fees collected for almost everything you do adds up substantially...Etrade waives most of those fees
Quote from EricP:
You occasionally point out that over half your traders have been with Bright for over 7 years. That being the case, you must not be getting many 'high volume' (or lower volume) traders from other firms.
Spin it however you'd like, but vast majority of successful, high volume traders would find your commission rates totally unacceptable. You've been spinning it otherwise for years, but facts are facts. What what it's worth, I average 25-35M shares per month (mostly higher priced NYSE stocks) and am just telling it like it is.
As am I. And, you would likely be one of the traders who I would say "keep your deal" in all honesty. And, I would suggest, at that volume (assuming you're making at least $3mil-$10mil per year with that much volume), you would be a likely candidate to buy an exchange membership, and go directly with a clearing firm (be careful who you pick however).
All the best,
Don
edit/add: The high volume traders from other firms over the last couple/three years amount to approximately 5-10% of the overall firm, FWIW. All details of affiliation with us is worth discussing, as it is with any business venture. And, many of the long term traders have talked to the "bargain basement" type firms as well, and they're still here. We have lost a few to lower commish, but not nearly as many as we get from other places.
Quote from TM_Direct:
Actaully...You couldn't be more wrong...thats is another problem for etrade and some prop groups.....MArgin and Credit interest are one of the biggest $$$ makers....etrade charges nothing whereas some of the larger ones charge a lot more....in Prop outfits they don't get the benefit of margin interest rebates....or credit interest rebates...Generally most clearing firms do not pay credit interest to DT accounts...some do but its not much....also the amoutn of fees collected for almost everything you do adds up substantially...Etrade waives most of those fees
You call 5-8% margin rates nothing? It's clear you are the expert so I'll sign off now.
Quote from Shreddog:
You call 5-8% margin rates nothing? It's clear you are the expert so I'll sign off now.
You should becuase you know nothng of what you say...5-8% is NOTHING when you are also PAYING 3-4% on the credit balances....Clearing firms use YOUR credit Balance to LOAN out to margin accounts....the difference is what the firm makes....if your charging 5% but paying out 3%....you do the math....but if you charge 9 or even 10% and pay out 3%.....do the math...
why do i bother....I'll just get another smart ass remark....I give up...I'll sign off too. I try to offer help and insight and all i get is grief....
Quote from TM_Direct:
Actaully...You couldn't be more wrong...thats is another problem for etrade and some prop groups.....MArgin and Credit interest are one of the biggest $$$ makers....etrade charges nothing whereas some of the larger ones charge a lot more....in Prop outfits they don't get the benefit of margin interest rebates....or credit interest rebates...Generally most clearing firms do not pay credit interest to DT accounts...some do but its not much....also the amoutn of fees collected for almost everything you do adds up substantially...Etrade waives most of those fees
Not exactly sure what you're saying. I do agree that eTrade had some problems, closed their Pro wing after like a year or so.
For the record. Goldman does pay credit interest for overnights, and does not charge any interest for day trades (which you well know). GS pays for short stock overnights of course. The retail firms are doing a injustice by keeping that money (most, I realize IB pays something at certain account size levels).
Don
Quote from Don Bright:
Not exactly sure what you're saying. I do agree that eTrade had some problems, closed their Pro wing after like a year or so.
For the record. Goldman does pay credit interest for overnights, and does not charge any interest for day trades (which you well know). GS pays for short stock overnights of course. The retail firms are doing a injustice by keeping that money (most, I realize IB pays something at certain account size levels).
Don
I suspected that ..some firms will pay but most do not...when i said e*trade chrages nothign i was broadly speakign compared to their peers....You also have a long time deal with GS and hold ovenights wich allows them to seg. and pledge...which in the end...THAT is where fims like GS make BOAT LOADS OF $$$....I never got into that portion becuase i never found the right guy to run it...but frims like GS, Bear, Pershing....they make huge $$$ loaning stock
It would be interesting to find out what these traders make who are throwing around high volume. A million shares a day, you are over working yourself. Back in the day, I use to sit next to this chinese guy who use to trade 1.5 million shares a day...1500 shares per position. It use to drive me nuts.
Long time ago, I use do some heavy volume but I just don't want to do it anymore.
Here is what you guys should be doing...finding a really good entry and holding 10,000 or more for a point or more. It isn't hard believe me.
Someday, those who trade heavy volume will understand exactly what I am talking about and those who trade average volume and do what I do...already understand.
Long time ago, I use do some heavy volume but I just don't want to do it anymore.
Here is what you guys should be doing...finding a really good entry and holding 10,000 or more for a point or more. It isn't hard believe me.
Someday, those who trade heavy volume will understand exactly what I am talking about and those who trade average volume and do what I do...already understand.