Honest Talk About Commisions/Rates

A

aeliodon

Its becoming very clear just how low the cost of clearing a trade really is.
IB offers a .005 rate all in - which is probably equivalent to a .004 rate with pass thrus at a prop firm.
Many brokers are offering free commissions and making the money of interest.

So dare I say it that at a prop firm if you're paying more than .004 then you're getting fleeced regardless of the volume you do. Keep in mind that your prop firm (whether a broker-dealer or a sub account) probably doesn't pay interest on your money and that's probably a major source of income for them aside from commissions.
 
Depends on how you trade I guess, but the passthroughs end up costing me another .002 minimum usually. So with a .005 commission at prop I'm paying alot more than I do at IB.

I guess they can get away with it because of the leverage they can offer.
 
costs for commissions, and costs for leverage should be 2 seperate things.

most firms already charge you interest for overnight borrowing, as well as an additional haircut charge if you're levered more then X to 1.

If you pay more for commissions at a prop firm then you do at retail (like IB), then what's the benefit of going prop?

Also, not to mention, there's tons of prop firms that charge less then IB's commissions, so why would you ever go to one that charges more?
 
Quote from aeliodon:

Its becoming very clear just how low the cost of clearing a trade really is.
IB offers a .005 rate all in - which is probably equivalent to a .004 rate with pass thrus at a prop firm.
Many brokers are offering free commissions and making the money of interest.

So dare I say it that at a prop firm if you're paying more than .004 then you're getting fleeced regardless of the volume you do. Keep in mind that your prop firm (whether a broker-dealer or a sub account) probably doesn't pay interest on your money and that's probably a major source of income for them aside from commissions.
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All shares above 1,000 = .004 (and you get your Listed rebates). Sliding scale down to .004 for the first 1,000 - depending on capital required by trader and shares executed.

Safety and continued training are all part of the equation too.

And, "charging for shorting stocks" (as mentioned in another thread somewhere here)- doesn't happen with us, and we have the best liquidity pool at Goldman Sachs.

"Keep in mind that your prop firm (whether a broker-dealer or a sub account) probably doesn't pay interest on your money and that's probably a major source of income for them aside from commissions."

All Bright traders receive interest on cash and short stock sales.

6 times equity with no haircut fees.

Use of 12 times equity with 1% per year h/c fee.

And, "use of capital" is not the same as "leverage" for our traders. It's not like being able to buy or short more shares with hopes of increasing profits...it's allowing them to partcipate in working strategies, again, that are "lower risk, higher reward" but tend to be "capital intensive." Opening only orders, black box/gray box trading, market making, pairs and mergers, etc.

As always, full disclosure including financials from any Firm you are connected with. Treat your trading career as a business, and be sure to weigh all the facts.

All the best,

Don
 
Quote from demoship:

costs for commissions, and costs for leverage should be 2 seperate things.

most firms already charge you interest for overnight borrowing, as well as an additional haircut charge if you're levered more then X to 1.

If you pay more for commissions at a prop firm then you do at retail (like IB), then what's the benefit of going prop?

Also, not to mention, there's tons of prop firms that charge less then IB's commissions, so why would you ever go to one that charges more?
More...

perhaps the office space? environment? computers?

I don't know I don't work at a prop firm, but I think those are legit reasons...
 
i have .35 rates at a prop shop and after fees and other non-commish charges it comes out to about .5 cent a share.

so i would say .35 at a prop shop is equal to .5 cent all in rate.
 
anyone on earth paying more than .003 at any prop house no matter what your vol is getting ripped. any prop shop doing 20 million vol is paying .001 max so even at .003 they're killing it. a trader doing 1 million should be at .0025 and a trader doing 2 million should be at .002 with 50-1 margin,free esignal and trade the news. don can run his mouth and talk all the smack he wants but those are the facts period. bright well could be paying more to clear threw gs but for 99% of traders who scalp and don't hold overnight the above is fine.
 
Quote from john12:

anyone on earth paying more than .003 at any prop house no matter what your vol is getting ripped. any prop shop doing 20 million vol is paying .001 max so even at .003 they're killing it. a trader doing 1 million should be at .0025 and a trader doing 2 million should be at .002 with 50-1 margin,free esignal and trade the news. don can run his mouth and talk all the smack he wants but those are the facts period. bright well could be paying more to clear threw gs but for 99% of traders who scalp and don't hold overnight the above is fine.
More...


Who's going to give me .002 with 50-1 buying power, and free esignal and free TTN? Are they willing to commit to that?
 
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