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echo trade question...
- Thread starter blackbook
- Start date
my understanding is that Prop firms like Echo and Bright have a lockup provision for a period of 1 year. it is some sort of regulation. usually (until now(?) i don't really know) they choose not to follow this option.
you can imagine that if sh't hits the fan and they are out of funds they may choose that option.
you can imagine that if sh't hits the fan and they are out of funds they may choose that option.
Quote from shortie:
my understanding is that Prop firms like Echo and Bright have a lockup provision for a period of 1 year. it is some sort of regulation. usually (until now(?) i don't really know) they choose not to follow this option.
you can imagine that if sh't hits the fan and they are out of funds they may choose that option.
I think that's just CBSX firms... Bright/Echo are series-7 firms (which is FINRA or NASD I think).
This pertains to SEC rule 15c3-1:
Contained in a letter found on the SEC.org's website (regarding prop firms):
"The Securities and Exchange Commission ("Commission") has for some time emphasized that capital contributions to a broker-dealer must not be temporary. The Commission stated that an affiliate's infusion of funds into a broker-dealer and subsequent withdrawal after a short time can be viewed as a loan and considered a liability of the broker-dealer."
From the web:
Rule 15c3-1
"An SEC rule that sets minimum net capital requirements for broker-dealers. Firms are expected to have liquid assets equal to or greater than a certain percentage of total liabilities. If the ratio falls below this minimum, the broker-dealer may face restrictions on soliciting new business or on keeping existing business."
CBSX prop firms seem to have a standard "one year lock up" rule, however I'm not sure why this would not apply to FINRA firms such as Bright and Echo. Generally speaking, the FINRA prop firms are well capitalized, so perhaps they have enough capital to meet any distribution requests by traders without any adverse effect to their minimum capital requirements as per Sec 15c3-1.
Contained in a letter found on the SEC.org's website (regarding prop firms):
"The Securities and Exchange Commission ("Commission") has for some time emphasized that capital contributions to a broker-dealer must not be temporary. The Commission stated that an affiliate's infusion of funds into a broker-dealer and subsequent withdrawal after a short time can be viewed as a loan and considered a liability of the broker-dealer."
From the web:
Rule 15c3-1
"An SEC rule that sets minimum net capital requirements for broker-dealers. Firms are expected to have liquid assets equal to or greater than a certain percentage of total liabilities. If the ratio falls below this minimum, the broker-dealer may face restrictions on soliciting new business or on keeping existing business."
CBSX prop firms seem to have a standard "one year lock up" rule, however I'm not sure why this would not apply to FINRA firms such as Bright and Echo. Generally speaking, the FINRA prop firms are well capitalized, so perhaps they have enough capital to meet any distribution requests by traders without any adverse effect to their minimum capital requirements as per Sec 15c3-1.