They have finished converting their business model from prop trading, to intermediating boutique brokerage services.
Because of the owner's financial industry ban, they can no longer be directly be involved in the actual trading, as such they need to pass on brokerage services through shell companies. Whatever money you trade - it's not theirs. They'll just allow you to risk 1:1 what you deposit with them, at best. Unsuspecting brokerages take on the risk. The shell company disappears if anything goes wrong.
The "prop" traders are not splitting profits, but getting paid around 90% on paper. If that seems like too good a deal, it's because it is. Commissions in the prop world used to be pass-through - not here. At DTTW, you pay through the nose by having your trading volume aggressively internalized, and pay significant mark-ups on anything other than US equity. Plus, whatever investment in technology they should have made years ago, they didn't. This means whenever the market is juicy, the system can't handle the above-average volume, and one is left looking at either massive losses or massive opportunity losses. So you're not trading with the actual market (internalizer), trading commissions are almost at retail levels, and whenever there are opportunities, you either lose or don't participate.
The only way in which they can sustain the resulting massive trader churn, is by cannibalizing on their own customers. They do this by aggressively marketing their services (with inflated, unrealistic profit projections) to the customer's customers, e.g. the trainees. It's not a sustainable model, because it means investing in the trading learning curve for new people will not pay off for anyone managing a floor.
It's not going to last much longer. As the prime brokerages have by now all figured out what kind of toxic volume (95% of customer base is Chinese) this company produces, only desperate brokerages will take the volume. At some point DTTW might need to change its trade name to "daytrade an ever-decreasing part of the equity world". This company is one FINRA investigation away from going busto.
Because of the owner's financial industry ban, they can no longer be directly be involved in the actual trading, as such they need to pass on brokerage services through shell companies. Whatever money you trade - it's not theirs. They'll just allow you to risk 1:1 what you deposit with them, at best. Unsuspecting brokerages take on the risk. The shell company disappears if anything goes wrong.
The "prop" traders are not splitting profits, but getting paid around 90% on paper. If that seems like too good a deal, it's because it is. Commissions in the prop world used to be pass-through - not here. At DTTW, you pay through the nose by having your trading volume aggressively internalized, and pay significant mark-ups on anything other than US equity. Plus, whatever investment in technology they should have made years ago, they didn't. This means whenever the market is juicy, the system can't handle the above-average volume, and one is left looking at either massive losses or massive opportunity losses. So you're not trading with the actual market (internalizer), trading commissions are almost at retail levels, and whenever there are opportunities, you either lose or don't participate.
The only way in which they can sustain the resulting massive trader churn, is by cannibalizing on their own customers. They do this by aggressively marketing their services (with inflated, unrealistic profit projections) to the customer's customers, e.g. the trainees. It's not a sustainable model, because it means investing in the trading learning curve for new people will not pay off for anyone managing a floor.
It's not going to last much longer. As the prime brokerages have by now all figured out what kind of toxic volume (95% of customer base is Chinese) this company produces, only desperate brokerages will take the volume. At some point DTTW might need to change its trade name to "daytrade an ever-decreasing part of the equity world". This company is one FINRA investigation away from going busto.
