Capital lock down

Fractal · Jan 9, 2007

Hi guys.

For those of you who trade at prop firms, is it common practice for the firm to lock part of your capital down for 1 year?

I thought this was true for firms that use trader capital contributions toward their net capital computations. But as far as I know, that's not common anymore, due to regulatory action.

Can anyone comment on the safety of these structures?

Fractal · Jan 9, 2007

Safe from regulators eventually knocking on the prop firm's door, that is, if they are using trader capital as for their own net cap reporting.

Don Bright · Jan 10, 2007

Quote from Fractal:

Hi guys.

For those of you who trade at prop firms, is it common practice for the firm to lock part of your capital down for 1 year?

I thought this was true for firms that use trader capital contributions toward their net capital computations. But as far as I know, that's not common anymore, due to regulatory action.

Can anyone comment on the safety of these structures?

FWIW, our traders can take $$ out immediately with no lock up. Always been that way.

Don

jmreyes · Jan 10, 2007

Per the Securities and Exchange Commission it is mandatory that prop firms hold back funds for a period of one year.

moneymaker2006 · Jan 10, 2007

Quote from jmreyes:

Per the Securities and Exchange Commission it is mandatory that prop firms hold back funds for a period of one year.

What prop firm has brainwashed you? Where did you read this?

Fractal · Jan 10, 2007

Quote from Don Bright:

FWIW, our traders can take $$ out immediately with no lock up. Always been that way.

Don

Do most of your traders fall under the Class-B model? I've always wondered how Bright groups work -- if they're different from the standard prop K-1 setups, which seem a little shaky to us from a regulatory standpoint.

Fractal · Jan 10, 2007

Quote from jmreyes:

Per the Securities and Exchange Commission it is mandatory that prop firms hold back funds for a period of one year.

I've heard this too, for the majority of firms out there. Haven't tested the waters yet to see under what conditions that applies, because I know a few places where it doesn't.

Don Bright · Jan 11, 2007

Quote from Fractal:

Do most of your traders fall under the Class-B model? I've always wondered how Bright groups work -- if they're different from the standard prop K-1 setups, which seem a little shaky to us from a regulatory standpoint.

I would be glad to connect you with my Compliance Officer, she's the best in the business (Spent 15 years as head regulator on the Exchange).

Don

jmreyes · Jan 12, 2007

With regard to certain firms choosing not to hold deposits for the one year period, let me add that just because a firm doesn't impliment something doesn't mean it doesn't apply. SDV, LLC lets anyone trade at their office without registering their traders. This is a clear violation. The fact that they do not register people with an exchange or the NASD doesn't mean that under certain circumstances registration doesn't apply.

Fractal · Jan 12, 2007

Quote from Don Bright:

I would be glad to connect you with my Compliance Officer, she's the best in the business (Spent 15 years as head regulator on the Exchange).

Don

Thanks Don. I will mentally bookmark that as an option to follow up on.