Net Capital requirements for broker/dealers.

Originally posted by skynet
i dont know if this question has been posted before, but does anyone know whats the minimum time that the following firms can hold onto a class b member's initial contribution to the firm?

Echotrade?

lieberwiess?

bright trading?



thanks.
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There is no rule about giving the money back as long as the firm has the capital put aside to do so. There has been some discussions on this topic in the past. You may want to check prior threads, or feel free to call personally to discuss (I am a bit cautious with sensitive issues on the board, I don't want to be accused of any negativity).

Don
 
Originally posted by Snosur4



Ok...now that wasn't so hard.

It is reassuring to know that the class A members have a considerable interest in the success of the business.

How about the policy on returning the capital of withdrawn class B members?

Snosur4
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It seems I just answered this above, but we don't hold anyone's money. As long as they give us the proper 30 day notice, etc.

Don
 
Originally posted by skynet
don,

thanks for the quick response. whats the minimum capital for remote and on site traders?
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Both are the same, $25K (we have made some exceptions for experienced traders, allowing a "lo cash entry" ).

I'll be out of the office for a couple of weeks on medical leave, but I should be answering emails within a week or so, so let me know what else I can help with!!

Don
 
In order for your money to be considered part of the regulatory
capital of the LLC, it must be in the firm for 1 year from the date you start.

I guess Bright doesn't need your deposit to be part of their regulatory capital. Others do.

(All of you are getting the benefit of what I learned from my securities lawyer at $400 / hour)
 
This is my take on the subject, any questions should be directed to the ECHOtrade office in AZ if you have any questions.

Currently, ECHOtrade holds the initial trader deposit (10k to 25k) for a year from joining the firm following the SEC rule. After a year you can walk with the cash at any time. (It is all in the LLC agreement)

When asked I suggest:

1. Only put in what you need to.
2. Take out profits regularly.

We can beat to death the risk department, firm vs. firm capital, how many traders vs. capital, overnight risk, etc. but the real fact is if you do not feel comfortable, trade retail! If I did not feel comfortable with ECHO, I would not have joined, my money is precious to me! I am a class B member and my cash is at risk behind the Class A partners, and I know the partners do not want to lose a dime of their money!

BTW - I have been with ECHO for well over a year and can withdraw all my money at any time. I believe the intent of the SEC ruling was to prevent LLC trading firms from taking or having the appearance of "customer accounts".

If you are acting like this is a customer account and this is not a permanent capital contribution to a Broker/Dealer you may be in violation. The SEC and regulators do not want funds coming in and out of a Broker/Dealer. Jeff told me a couple of months ago that ECHO's legal counsel wants us to follow the lead of the SEC and he HATES the fact that ECHO is required to hold money for ANY length of time.

Please do your own research into the matter, I can only repeat what I understand are the facts as they pertain to ECHOtrade and NOT ANY OTHER FIRM and their compliance with SEC or exchange guidelines.

I hope I have helped contribute to any questions out there.
 
Good advice from the EchoTrade manager above. If you want to go prop, then don't put more than you need to fund your account into the firm. There is risk, and you aren't insured. Plus why are you going prop if you aren't going to trade on a short time frame and take advantage of the leverage? You can do quite well with 50k at 20:1 leverage, so why put in 500k? I've removed my entire initial contribution from my prop firm already this year in accrued profits thereby lowering my exposure. Take advantage of what these business models have to offer. If you don't want or need high leverage, or aren't experienced enough to manage your risk, then stay retail.
 
I am currently retail and thinking about taking the "7" exam. I ordered the books and study materials from amazon.com and should have them in about a week. I feel that even if I don't go "pro" I have everything to gain and nothing to lose by reading some more :)

While I have traded for many years on and off I would like to go to the next level. ( I have not really made or lost much money and it seems that my brokers that I have used and am using have made the most from my trading.)

I am thinking of taking the one week Las Vegas trip and seeing what I can learn that may improve my performance. (I am also thinking of taking my wife who said she would go if she can sit by the pool all day) :)

It would appear to me that the biggest advantage to going "pro" is the leverage one gains. At my current 4-1 its not bad but I feel that if my leverage AND my abilities were to improve that I would have a better balance sheet at the end of the month.

The commissions that I pay now don't seem to be any higher than what Bright or Echo offer??

I would like to know what people who have taken the course offered by Bright think of it and maybe some reasons that I should or should not take the test (series 7).

I wish the Bright website offered more information on the content and experience to be gained in attending the week long training. I also have to say the same for Echo.
 
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