Cost Structure for CME Futures Traders

[scalper21]

I have noticed over the years that a majority of the traders on this board pay retail commissions. I have attached a spreadsheet that clearly shows that if you average more than 50 sides(25 round turns) a day and pay IB rates which are $2.4 a side you should lease a seat at the CME, and open an account at a professional clearing firm.

http://www.cme.com/trading/mem/leaseprices.html
http://www.cme.com/clearing/clr/fees/lessememp1870.html

 

[SethArb]

IB offers unbundled rates too which are about as low as you can go if doing some volume ... but

I agree though that for some big volume accts

exchange membership makes good business sense

 

[pcvix]

scalper21

Can you possibly recommend a few reputable professional clearing firms which welcome active retail traders?

In addition to the monthly leasing fee, are there any sizable incidental costs one should take into account, like monthly software (eg, X_Trader) subscription fee?

By comparison, for a CME Electronic Corporate Membership, one has to set up and maintain an LLC, which is quite a hassle. Further, from December it's likely that membership fees will be payable.

Thanks.

 

[scalper21]

Quote from pcvix:

scalper21

Can you possibly recommend a few reputable professional clearing firms which welcome active retail traders?

In addition to the monthly leasing fee, are there any sizable incidental costs one should take into account, like monthly software (eg, X_Trader) subscription fee?

By comparison, for a CME Electronic Corporate Membership, one has to set up and maintain an LLC, which is quite a hassle. Further, from December it's likely that membership fees will be payable.

Thanks.

http://www.advantagefutures.com/

The speadsheet shows the monthly expenses for a leasee. Look at the bottom left side of spreadsheet. It includes lease payment of 900 and 800 for TT.

 

[r-in]

Hmm, thank you for the spreadsheet. I'm at 1.99 a side now with no platform fee, so for the IOM I'm under 50 sides to break even. I would most likely go with the IMM which gives me the EC also for ~1300 and I'm back to ~ 50 sides. What other costs or other considerations are there to leasing a seat? Do I need to incoporate or anything?

 

[scalper21]

Quote from r-in:

Hmm, thank you for the spreadsheet. I'm at 1.99 a side now with no platform fee, so for the IOM I'm under 50 sides to break even. I would most likely go with the IMM which gives me the EC also for ~1300 and I'm back to ~ 50 sides. What other costs or other considerations are there to leasing a seat? Do I need to incorporate or anything?

No you do not have to incorporate. I think the application fees run between 1000-1500. The clearing firm you decide to trade thru will help you with the paperwork.

 

[larrybf]

scalper21 ...........thanks for the great info.........i have always felt the benefits of cutting commissions costs did not help enough to offset the self employment tax liability created by being an exchange member............any comments???,,,,,,,,,,thanks

 

[r-in]

Why would there necesarilly be self-employment taxes to deal with as a result of being an exchange member?

 

[larrybf]

r-in........i am using the IRS schedule SE instructions as my guide,,,,,,but i am not expert

 

[scalper21]

Quote from larrybf:

scalper21 ...........thanks for the great info.........i have always felt the benefits of cutting commissions costs did not help enough to offset the self employment tax liability created by being an exchange member............any comments???,,,,,,,,,,thanks

I give my info to my tax guy at the end of the year. The only thing I know about taxes is that the more taxes I have to pay the more money I have made!!!!