What are requirements to get direct access to ECNs like island ?
Can I trade stocks without any broker ? How much money I need to open my own clearing firm ?
- Thread starter thepalatinezoom4
- Start date
Me too interested to know 
According to the following link, one needs $100,000 to $150,000 and much paperwork:
https://www.investopedia.com/articl.../steps-starting-independent-broker-dealer.asp
See also https://centerpointsecurities.com/clearing-firms-guide/
According to the following link, one needs $100,000 to $150,000 and much paperwork:
https://www.investopedia.com/articl.../steps-starting-independent-broker-dealer.asp
See also https://centerpointsecurities.com/clearing-firms-guide/
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OCC provides central counterparty clearing and settlement services to multiple exchanges and platforms for options, financial and commodity futures, security futures and securities lending transactions. OCC clearing members comprise approximately 105 of the largest U.S. broker-dealers, futures commission merchants and non-U.S. securities firms that serve both professional traders and public customers.
Begin Membership Process
Benefits of OCC Membership include:
The Credit Risk and Member Services Departments conduct an on-site visit at the firm. The visit addresses financial and operations requirements of OCC.
Approval
The Applicant's Designated Examining Authority (DEA) and/or Designated Self-Regulatory Organization (DSRO) is contacted for pertinent information that OCC should consider during its due diligence review.
The due diligence of the Applicant and any findings associated with the applicant are submitted in a memo to the Board Risk Committee for review. If a request is not made to review the application at an upcoming meeting of the Board Risk Committee, the Office of the Executive Chairman maintains delegated authority to approve or disapprove the application.
Interested Applicants are directed to OCC's By-Laws (PDF) and Rules (PDF) for exact requirements and corresponding interpretations. If you would like to apply for OCC Membership the first step is completing our Pre-Qualification Online Application.
Schedule of Fees
Clearing Member
Clearing
Clearing Fees
Trades with contracts of 0-1,222 $0.045
Trades with contracts of greater than 1,222 $55.00/trade
New Products
Unless otherwise agreed to by OCC and the applicable exchange, from the first day of listing through the end of the following calendar month $0.00
Linkage per side $0.02
*A Linkage transaction that includes more than 2,750 contracts will be charged a flat fee of $55.00 per trade per side.
Minimum Monthly Clearing Fee $200.00
Exercise Fee — per line item on exercise notice $1.00
Membership
New Clearing Member Qualification Fee $4,000.00
Stock and Market Loan Program Transaction Fees
Per transaction assessed against each lender and borrower $1.00
Stock and Market Loan Program Borrower Fees
Monthly annualized charge on average daily notional outstanding balance 0.4 basis point
Stamps
Clearing Member Authorization Stamp $23.00/stamp
Ancillary Services
Per Month
TIER I $1,500.00
ENCORE Access • MyOCC Access • Data Service - proprietary position and trade data (includes transmission to service bureau) • Report Bundle • Series File • Special Settlement File • Open Interest File • Prices File • Stock Loan File • Theoretical Profit and Loss Values • Leased line charges are additional
TIER II $1,000.00
ENCORE Access • MyOCC Access • Data Service - proprietary position and trade data (includes transmission to service bureau) • Report Bundle • Leased line charges are additional
TIER III $650.00
ENCORE Access • MyOCC Access
TIER IV (Stock Loan only) $300.00
ENCORE Access • MyOCC Access
Additional Clearing Member No Charge
Leased Line Service Destinations Per month, per line
Midwest $1,000.00
East Coast $1,500.00
West Coast $2,000.00
Cash Management Fee
Monthly annualized charge on Clearing Member's average daily cash balance in OCC's Federal Reserve bank account. 5 basis points
Operational Loss Fee
Maximum Operational Loss Fee** $141,866,667.00 less the aggregate amount of Operational Loss Fees previously charged and not refunded as of the date calculated, divided by the number of Clearing Members at the time charged.
** OCC would charge the Operational Loss Fee if OCC's shareholders' equity falls below $222,000,000.00 at any time or falls below $247,000,000.00 for a period of 90 consecutive calendar days. If less than the maximum Operational Loss Fee is needed to return OCC's shareholders' equity to $272,000,000.00, OCC will charge only that amount.
OCC Capital Management Reporting
Unaudited as of June 30, 2020 Full Year Projection
(in millions) Fcst Bgt B(W)
Operating Income 1 $284.5 $143.2 $141.3
Average Daily Contract Volume 25.2 19.0 6.2
Liquid Net Assets Funded by Equity 2 $456.8 $272.0 $184.8
1 Operating Income represents net income before taxes
2 Liquid Net Assets Funded by Equity represents cash and cash equivalents less cash payable to the Securities and Exchange Commission for Section 31 Fees
Total Equity $512
Early Warning $272
Target Capital $247
Trigger Event $222
Clearing Member & Non-Clearing Member
Publications
Disclosure Documents $0.45
OCC/ICC By-Laws and Rules Updates can be obtained on a subscription basis for $47.00 per year.
Non-Clearing Member
Series Information Per Month
Non-Distribution $1,750.00
Distribution $3,000.00
Real Time Data (in addition to fees listed above) $250.00
Prices Information $3,000.00
Theoretical Profit and Loss Values $1,000.00
Figure OCC alone about $5,000,000 to start unless you subcontract facilities and the clearing crew - $2.5 million net capital.
You'll still need exchange(s) access.
Begin Membership Process
Benefits of OCC Membership include:
- Financial guarantee and safeguards mitigate counterparty credit risk
- Utility model allows for low transaction fees
- Cross-margin facility provides margin offset
- Central processing across multiple exchanges allows for single interface
- Direct access to reports allows greater control of operations and margins
- Fungibility across U.S. listed options market
- Resilient technology (Internet-based, real-time ENCORE clearing system)
- World Class customer service
- Applicant must be a broker dealer or FCM registered with the SEC or CFTC, or a non-U.S. securities firm.
- Applicant must meet minimum net capital requirements (initial requirement is a minimum of $2,500,000.
- Applicant must have qualified staff and adequate facilities to self-clear options and interface with OCC and other Clearing Members (or contract for a facilities management arrangement).
- Must Enter all Applicable Information into the OCC Pre-Qualification Online Application
- Must submit appropriate paperwork received from Pre-Qualification
- FOCUS Reports
- Audited Financial Statements
- The Findings of Securities and Commodities Regulators
- $4,000 Non-refundable Qualification Fee
- Resumes of Staff Responsible for P&S, Positions Reconciliation and Margin
The Credit Risk and Member Services Departments conduct an on-site visit at the firm. The visit addresses financial and operations requirements of OCC.
Approval
The Applicant's Designated Examining Authority (DEA) and/or Designated Self-Regulatory Organization (DSRO) is contacted for pertinent information that OCC should consider during its due diligence review.
The due diligence of the Applicant and any findings associated with the applicant are submitted in a memo to the Board Risk Committee for review. If a request is not made to review the application at an upcoming meeting of the Board Risk Committee, the Office of the Executive Chairman maintains delegated authority to approve or disapprove the application.
Interested Applicants are directed to OCC's By-Laws (PDF) and Rules (PDF) for exact requirements and corresponding interpretations. If you would like to apply for OCC Membership the first step is completing our Pre-Qualification Online Application.
Schedule of Fees
Clearing Member
Clearing
Clearing Fees
Trades with contracts of 0-1,222 $0.045
Trades with contracts of greater than 1,222 $55.00/trade
New Products
Unless otherwise agreed to by OCC and the applicable exchange, from the first day of listing through the end of the following calendar month $0.00
Linkage per side $0.02
*A Linkage transaction that includes more than 2,750 contracts will be charged a flat fee of $55.00 per trade per side.
Minimum Monthly Clearing Fee $200.00
Exercise Fee — per line item on exercise notice $1.00
Membership
New Clearing Member Qualification Fee $4,000.00
Stock and Market Loan Program Transaction Fees
Per transaction assessed against each lender and borrower $1.00
Stock and Market Loan Program Borrower Fees
Monthly annualized charge on average daily notional outstanding balance 0.4 basis point
Stamps
Clearing Member Authorization Stamp $23.00/stamp
Ancillary Services
Per Month
TIER I $1,500.00
ENCORE Access • MyOCC Access • Data Service - proprietary position and trade data (includes transmission to service bureau) • Report Bundle • Series File • Special Settlement File • Open Interest File • Prices File • Stock Loan File • Theoretical Profit and Loss Values • Leased line charges are additional
TIER II $1,000.00
ENCORE Access • MyOCC Access • Data Service - proprietary position and trade data (includes transmission to service bureau) • Report Bundle • Leased line charges are additional
TIER III $650.00
ENCORE Access • MyOCC Access
TIER IV (Stock Loan only) $300.00
ENCORE Access • MyOCC Access
Additional Clearing Member No Charge
Leased Line Service Destinations Per month, per line
Midwest $1,000.00
East Coast $1,500.00
West Coast $2,000.00
Cash Management Fee
Monthly annualized charge on Clearing Member's average daily cash balance in OCC's Federal Reserve bank account. 5 basis points
Operational Loss Fee
Maximum Operational Loss Fee** $141,866,667.00 less the aggregate amount of Operational Loss Fees previously charged and not refunded as of the date calculated, divided by the number of Clearing Members at the time charged.
** OCC would charge the Operational Loss Fee if OCC's shareholders' equity falls below $222,000,000.00 at any time or falls below $247,000,000.00 for a period of 90 consecutive calendar days. If less than the maximum Operational Loss Fee is needed to return OCC's shareholders' equity to $272,000,000.00, OCC will charge only that amount.
OCC Capital Management Reporting
Unaudited as of June 30, 2020 Full Year Projection
(in millions) Fcst Bgt B(W)
Operating Income 1 $284.5 $143.2 $141.3
Average Daily Contract Volume 25.2 19.0 6.2
Liquid Net Assets Funded by Equity 2 $456.8 $272.0 $184.8
1 Operating Income represents net income before taxes
2 Liquid Net Assets Funded by Equity represents cash and cash equivalents less cash payable to the Securities and Exchange Commission for Section 31 Fees
Total Equity $512
Early Warning $272
Target Capital $247
Trigger Event $222
Clearing Member & Non-Clearing Member
Publications
Disclosure Documents $0.45
OCC/ICC By-Laws and Rules Updates can be obtained on a subscription basis for $47.00 per year.
Non-Clearing Member
Series Information Per Month
Non-Distribution $1,750.00
Distribution $3,000.00
Real Time Data (in addition to fees listed above) $250.00
Prices Information $3,000.00
Theoretical Profit and Loss Values $1,000.00
Figure OCC alone about $5,000,000 to start unless you subcontract facilities and the clearing crew - $2.5 million net capital.
You'll still need exchange(s) access.
Robert Morse
Sponsor
You would have to start your own broker-dealer and become a member of that exchange. I'm not going to go into the details because it requires more than money.
Let me guess...You can't make money trading stocks because you feel the brokers you use are not routing your orders properly, so you'd rather beat them by becoming your own clearing house?
WOW
No, I guess it's rather about margin requirements, and of course commissions & fees, ie. about money
what else? With an own clearing one can increase the leverage by defining own margin requirements very "liberal", ie. setting it to bare minimum possible...
With an own clearing one can increase the leverage by defining own margin requirements very "liberal", ie. setting it to bare minimum possible...
How do you think that would work?
It's the broker giving you the margin, not the exchange. How exactly would you give yourself leverage?