Commission rates have been in a race to zero for quite some time. Firms make money by lending at Fed Funds+/-at 0.25% means not a lot of juice in the margin dept.
Exchange fees are billed monthly...its not cheap.
Is Brokerage a zero risk operation?
- Thread starter nemesis45
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Commission rates have been in a race to zero for quite some time. Firms make money by lending at Fed Funds+/-at 0.25% means not a lot of juice in the margin dept.
Exchange fees are billed monthly...its not cheap.
Historically taking in customer money at zero or very low rates and earning 4, 5 or 6% has been a significant profit center for firms. At the moment that revenue source is gone. You seem to know next to nothing about any of this. You can't learn the game on a message board.
Other costs of operating a brokerage firm include online presence management, marketing, and cyber attacks. Do not underestimate minor issues like this. All business have risk especially those that handles money. Failure of a broker to handle traders who are very smart to play tricks could lead to a great loss on the broker's side.
Is running a phone company a zero risk operation?
It didn't help having a crook (PFG) and an incompetent (MFG) at the top, but many say the demise of those firms was hastened by that profit center drying up.
The drying up of that important profit center was a major blow to the whole industry and contributed to the demise of a few firms.
the revenue source still exists. check retail margin rates. 6%. is the norm. there is barely more than one exception. if anything there is collusion between the retail houses to maintain the wide spread.
Thats true. But retail flow doesnt pay the bills at the big houses. There are no money managers, funds, pros..etc paying anywhere near those rates to borrow. I can borrow the world for FF+125 bps. And if I stunk it up a bit and complained could probably get FF+100. Better than a 30 day bill, but still not a money maker at all.
You are right I do not know much about brokerage houses or how they operate, so was curious regarding their operations. I am ok, with getting as much information as i can, not like I am looking to open up a house myself, or can for that matter.
Licenses, infrastucture, connectivity costs ,reputation
If i wanted to know about phone companies - i would have posted elsewhere.
I wanted to know the specific costs involved in the business..