Is it possible to set up own prop and borrow from banks?

S

sectrader

Hi,
I am trying to go with prop firm, but process is long, convoluted, but moreover they will see my trades with them and likely monitor trades with other brokers. I am somehow afraid of somebody in prop firm to study my trades and follow my system.
I've survived with 2 retail firms, but my luck can stop at some point. Also, I am afraid that prop firm will change the parameters of the agreement, for example, reducing the leverage and together with with some severe limitations it will be much worse than retail firm.
Also, in retail firms mostly computers monitor my account, so my success can fly under radar, but in prop firm I will have multiple risk officers required to monitor my account, so they will now how profitable it is.
Is it possible to create own prop firm for myself (my own trades)and borrow more than Reg T (more than 2 to 1 overnight) from banks?
Are prop firms borrow from banks putting trader's securities as collateral or are they lending to traders their own capital?
I understand that it might require registration, RIA setup and so on.
 
LOL, the last thing we do is "monitor" our traders methods. We had a guy in Holland, whom I never met, started trading, made over $3million in a couple of years, and I still have no idea what his trading plan consisted of.

Borrowing money to start a trading firm would likely be a tough route to go. You can, however, buy a Seat on the exchange, or join the NASD, and meet with a smaller Clearing firm (maybe Penson?), and see if they will clear you. You would need to hire a really (really) good Compliance Officer, but all this can be done.

FWIW,

Don
 
Quote from Don Bright:

LOL, the last thing we do is "monitor" our traders methods. We had a guy in Holland, whom I never met, started trading, made over $3million in a couple of years, and I still have no idea what his trading plan consisted of.

Borrowing money to start a trading firm would likely be a tough route to go. You can, however, buy a Seat on the exchange, or join the NASD, and meet with a smaller Clearing firm (maybe Penson?), and see if they will clear you. You would need to hire a really (really) good Compliance Officer, but all this can be done.

FWIW,

Don
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Penson!!???? come one Don....you know the better choices available!!!!
 
Quote from TM_Direct:

Penson!!???? come one Don....you know the better choices available!!!!
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LOL, my point is that Goldman is unlikely to clear an individual (or firm) that is just now getting into the business. Heck, we were nervous about our staying with GS after they bought SLK (we were one of the very few lucky ones).

Don
 
Quote from Don Bright:

LOL, my point is that Goldman is unlikely to clear an individual (or firm) that is just now getting into the business. Heck, we were nervous about our staying with GS after they bought SLK (we were one of the very few lucky ones).

Don
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Wasn't talking about them Don!!!!! I was talking about ...ahem...a firm im VERY familiar:D
 
Quote from TM_Direct:

Wasn't talking about them Don!!!!! I was talking about ...ahem...a firm im VERY familiar:D
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Hey, you get enough "free press" outta this place, LOL.

OK, there are many firms that might assist a new and smaller firm...just look around (maybe "Shill Trading"?).

Don :p
 
The OP might consider a retail account with portfolio margin, say at IB. This will give you roughly 6-1 overnight on outrights and more if your portfolio is hedged. Unless you are trying to compete with other prop firms there is really no reason to try to build your own firm.

Also, if your strategy is so good that people will try to steal it, then you're going to be very rich very quickly, even trading retail.

Best of luck in your trading.
 
Quote from Traveler:



Also, if your strategy is so good that people will try to steal it, then you're going to be very rich very quickly, even trading retail.

Best of luck in your trading.
More...

Not necessarily. There are a lot of people with either capital intensive strategies or strategies that net very little per contract or shares traded, and many times both. It's hard to implement these types of strategies as a solo operation.
 
Quote from TM_Direct:

Penson!!???? come one Don....you know the better choices available!!!!
More...

Our firm clears thru Penson. My statements/positions/etc. are usually readily available and fairly accurate, afaik.

You guys are talking like Penson is the red-headed step child of clearing. Is there something you guys want to share?

:confused:
 
Quote from volatilitypimp:

Our firm clears thru Penson. My statements/positions/etc. are usually readily available and fairly accurate, afaik.

You guys are talking like Penson is the red-headed step child of clearing. Is there something you guys want to share?

:confused:
More...

I meant no disrespect to Penson...its a good, quality firm..i was being tongue and cheek about another clearing firm im VERY familiar with:D
 
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