emini trading

stevet

The IB, whether Independent or Guaranteed, is always liable for any of its clients' debits or firm's errors.

The money posted is required by the NFA as a safety net. Most IBs when they start-up do not have the extra $30,000 to post so they will be guaranteed by an FCM who will do it for them. Also, most FCMs will not accept an unestablished IB on an independent basis.
 
craigross

so are you saying that as long your account is with the clearer -that there is no difference for the trader which broker they use
 
Originally posted by def
Not true. Another example. Interactive does not clear all of its business in all markets. It owns the exchange seat, owns the hardware, does the execution, etc. At days end it just gives the trades up to the clearing firm who does the clearing for IB. In cases like this, the clearing firm has no responsibility for the brokers software, hardware, etc.

There are other cases where broker A will use IB for executions (IB via front end or back end software) and IB will give the trades back to the broker who does their own clearing.
More...


What is the motivation/reasoning for IB to use another clearing firm for some types of biz?
 
quite simple - cost/leverage but also regulatory and staffing issues. Overseas there are many rules/regulations that differ from the US. When starting to trade in a new market, our main concern is not about hiring compliance and regulatory staff to deal with everything from stock loan to regulatory compliance. It is easier trading through someone else. However, to bring our costs down and control our own destiny, we typically purchase seats or exchange trading rights. If we continue to clear through someone else after becoming members of an exchange, it usually comes down to leverage.

I'll give HK as an example. When I started here in 95 the handover was approaching and there were some concerns of country risk. We wanted to keep as little cash in HK - just in case the tanks rolled in - or more likely a lifting of the peg of the HKD to the USD. That was reason number one. Reason number two is that we must have two seperate companies in HK. One for Commodities and one for Securities. Lets assume we placed a perfect basket of stocks against futures. The risk of the position itself is low. However, the futures exchange would see a long position. The stock exchange would see a short position and we'd have to pay double margin to maintain the position. However, if we use an offshore affiliate as the market maker and the local companies as executing brokers and find a firm/bank that recognizes the true portfolio risk of the position. The amount of cash required to place such a position (haircut) could be reduced 20 fold. The clearing firm that recognizes the true risk of the position gets rewarded by financing the margin at the exchanges and receiving additional clearing fees (we do more trades). We get rewarded by gloabally allocating our capital to maximize our returns and putting on bigger - not riskier - positions.
 
def

-However, if we use an offshore affiliate as the market maker and the local companies as executing brokers and find a firm/bank that recognizes the true portfolio risk of the position. -

Why not do the whole trade yourselves and still use the firm/bank that recognises the true risk?
 
Craigross, (or anyone who else who knows the answer,,,)
Is it possible to calculate moving averages at some per minute interval on a level II screen, or is that typically done with realtime charting capabilities only. does your A**x broker offer this charting feature?
thanks
 
There is no charting if you use an order entry system like PATS JTrader or IB TWS.
For charting you can use whatever you like: CQG, TS6, QuoteSpeed, Realtick, Pronet, esignal, ensign ...
 
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