Bright Trading = Proprietary Firm?

[rtharp]

Ultimately there is a phrase term I use. Professional firm and proprietary firm.


Professioanl firms don't usually back you and take no portion of the profits.

Proprietary firms back you and take a portion of the profits.


Echo, Bright, Liber and Weissman are professional in that you MUST be licensed to conduct business with them. Professional outfits allow you to have exchange membership benefits at a cost that is productive for a smaller individual trader.

If you are trading through a brokerage firm even if you are direct access you are not a member of the PHLX or Chicago or any of the other exchanges. You are their customer subject to different rules and regulations.

Robert Tharp

 

[Don Bright]

Originally posted by Vinny1
Gene,does this K-1 form deduct out commissions and desk fees,showing the trader's net gains?

We actually take this one step further and allow our traders to submit expense reports at year end for their "outside" expenses (computers, cable, aol, publications, and training expenses, etc.). We then issue them a check for these costs, thus reducing their K-1 income.

Don't forget that our traders save about 15% of their earnings by being exempted from FICA (self employment) and Medicare taxes. This is great for the trader...a $100K a year trader saves about 1200 per month.

We go to great lengths to keep our traders from being simple "customers" (which would really hurt their ability to make money), and we make sure that they are treated more like stock exchange members (with all the added benefits).

Proprietary does not equal "employee" per se' and we like to have independent souls trading with us. Our business model is continuing to work well for the traders (or else it wouldn't work for us). We cater to the more traditional trader, much like those who explored trading on an exchange (professionally) in the "old" days.