Dorman Trading financial statement 2016

[speedo]

You're more knowledgeable about financial statements that I, but my take is anyone might show "low cash" at some time for a variety of reasons. If they need more cash, they can always convert some other holding to cash. I like to see the ratio of "net capital vs required net capital" be decent as a cushion against unforseen events. What do you think, please?

Why would a FMC have off balance sheet holdings?

 

[Scataphagos]

Wedbush is an FCM with >$160mm in net capital as of end of January 2017 that also has a securities business. Lightspeed Trading is a broker that introduces business to Wedbush.
http://www.cftc.gov/idc/groups/public/@financialdataforfcms/documents/file/fcmdata0117.pdf

Doesn't Wedbush also act as a futures broker with their own customers (not introduced)?

 

[Robert Morse]

You're more knowledgeable about financial statements that I, but my take is anyone might show "low cash" at some time for a variety of reasons. If they need more cash, they can always convert some other holding to cash. I like to see the ratio of "net capital vs required net capital" be decent as a cushion against unforseen events. What do you think, please?

What holdings would that be that they can convert? I have nothing good or bad to say about Dorman. We don't do business with them. My only comment I made was that vs other FCMs, they are on the small side based on Net Capital. Most smaller FCMs prefer Day-traders becasue the overnight requirement of 8% of customer margin becomes hurdle.

 

[Scataphagos]

Why would a FMC have off balance sheet holdings?

They not "off balance sheet"... on the balance sheet but in some other form than "cash"

 

[Robert Morse]

Doesn't Wedbush also act as a futures broker with their own customers (not introduced)?

Yes but that is just being an FCM doing business with the public. I guess it is not incorrect to call them an FCM and a Broker.

 

[speedo]

They not "off balance sheet"... on the balance sheet but in some other form than "cash"

That's the point, there is little else on the balance sheet to convert relative to customer funds.

 

[Scataphagos]

What holdings would that be that they can convert? I have nothing good or bad to say about Dorman. We don't do business with them. My only comment I made was that vs other FCMs, they are on the small side based on Net Capital. Most smaller FCMs prefer Day-traders becasue the overnight requirement of 8% of customer margin becomes hurdle.

If I sound ignorant, it's because I am. They've got "excess capital above required net capital". It's not all in cash... like in securities or such. If they needed cash, couldn't they convert some of that capital to cash as needed? Just like a person... maybe needs some cash and can sell some stock?

 

[Pluralsight]

Wedbush is an FCM with >$160mm in net capital as of end of January 2017 that also has a securities business. Lightspeed Trading is a broker that introduces business to Wedbush.
http://www.cftc.gov/idc/groups/public/@financialdataforfcms/documents/file/fcmdata0117.pdf

Dorman is also in that pdf, with smaller net capital than the average as you pointed out. Of course there are some colossal banks in the list, but still makes me a little concerned.

 

[Pluralsight]

Yes but that is just being an FCM doing business with the public. I guess it is not incorrect to call them an FCM and a Broker.

I think that's the same model Dorman have.

 

[Scataphagos]

Dorman is also in that pdf, with smaller net capital than the average as you pointed out. Of course there are some colossal banks in the list, but still makes me a little concerned.

Dorman's ratio of net capital vs required net capital is ~5:1. Some on the list are < 2:1. A couple are <1:1. I thought I was comfortable with Dorman being "5:1" when I moved my account there. (It had been at Wedbush through an IB, but all of the IB's accounts were forced to leave Wedbush... or at least so they said.)