How to start your own broker/dealer firm

[veryFatcat]

I would like to start my own B/D firm so I can save on the fee's that I pay for my broker. what I want to do is have my own online trading platform.

what and where should I start? I need help

 

[trend2009]

I guess it may be too much work for you to handle. you need a large team at least to manage all of this.

Quote from veryFatcat:

I would like to start my own B/D firm so I can save on the fee's that I pay for my broker. what I want to do is have my own online trading platform.

what and where should I start? I need help

 

[clearinghouse]

Quote from trend2009:

I guess it may be too much work for you to handle. you need a large team at least to manage all of this.

Let's say hypothetically he was a billionaire and he could do whatever he wanted. How would he go about doing this? What's the process?

I am also interested in how you become a member firm of a place like NASDAQ or BATS.

 

[rmorse]

First I want to point out, that in my opinion, the time, effort, expense and regulator issues that arise from running a Broker Dealers, only have value if you want to do customer business or receive commissions from the business you want to run. For trading operations, we and other Introducing Brokers can competitively get you where you need to be cost wise, if your trading volumes are high enough. And, if you start your own BD and the trading volumes are not there, your fixed costs will out way the benefits, and your costs maybe higher because the Prime Broker cares about volume.

Check this out: http://www.sec.gov/answers/brkrdlr.htm

I’m not sure why you want to build your own trading platform, but you don’t need to be a broker dealer for that. Build it, test it and become certified with the brokers that you will connect to, and you can use it.

Good luck

 

[trend2009]

I guess the op builds broker dealer to save commission. this only makes sense if his own trading volume is high enough. another advantage of not trading via other broker is to protect trading systems. How high enough is the volume to worth building one's own broker? I think should be around tens of millions of shares per day.

Quote from rmorse:

First I want to point out, that in my opinion, the time, effort, expense and regulator issues that arise from running a Broker Dealers, only have value if you want to do customer business or receive commissions from the business you want to run. For trading operations, we and other Introducing Brokers can competitively get you where you need to be cost wise, if your trading volumes are high enough. And, if you start your own BD and the trading volumes are not there, your fixed costs will out way the benefits, and your costs maybe higher because the Prime Broker cares about volume.

Check this out: http://www.sec.gov/answers/brkrdlr.htm

I’m not sure why you want to build your own trading platform, but you don’t need to be a broker dealer for that. Build it, test it and become certified with the brokers that you will connect to, and you can use it.

Good luck

 

[forsalenyc]

Quote from veryFatcat:

I would like to start my own B/D firm so I can save on the fee's that I pay for my broker. what I want to do is have my own online trading platform.

what and where should I start? I need help

The best way FOR YOU to save money on commission fee schedule is to give up trading...........precisely.

 

[rmorse]

Quote from trend2009:

I guess the op builds broker dealer to save commission. this only makes sense if his own trading volume is high enough. another advantage of not trading via other broker is to protect trading systems. How high enough is the volume to worth building one's own broker? I think should be around tens of millions of shares per day.

When you say"protect trading systems", what do you mean? Do you mean your strategy?

 

[rmorse]

Quote from clearinghouse:

Let's say hypothetically he was a billionaire and he could do whatever he wanted. How would he go about doing this? What's the process?

I am also interested in how you become a member firm of a place like NASDAQ or BATS.

What benefit would your receive from being a member when many firms offer DMA to their customers without the cost and requirements for membership? I can give you access to all US exchanges with FULL pass through of ECN Rebates, without membership.

 

[trend2009]

i mean trading strategies. if you trade via a broker, he can look into your trades and reverse engineer your system.

Quote from rmorse:

When you say"protect trading systems", what do you mean? Do you mean your strategy?

 

[rmorse]

Quote from trend2009:

i mean trading strategies. if you trade via a broker, he can look into your trades and reverse engineer your system.

I guess that is possible. Have you ever heard anyone doing that? Our clients have their own code on their computer or server connected to either an API or direct connect into a FIX connection.

We would never ask for the clients code. I would love to tell you that my competitors do, but I've never heard an instance of that. When you have to be careful, is hiring outside programmers to "help". You are at risk then if you don't trust them.