Question for you sir: I use Schwab and at one time OX. OptionsXpress charged me much higher commissions so I am now Schwab only (and another brokerage as diversification). With contract sizes I trade, Schwab is actually quite competitive.All the e commerce firms wholesale to the e commerce RIA community.
Why didn't they offer you that rate ?
1. You reached the wrong area in the firm.
2. Asset base too small and not enough to protect the firm or earn anything from custody.
3. The circumstances are not as you describe
4. Their history with you has led them to a decision.
Without knowing more - my guess would activity versus account size. Obviously that is conjecture on my part.
I know Schwab did it everyday as I worked at oX/Schwab. I also know our neighbor trades options even cheaper than that, but his fund is not all options and that gives them tons of assets to custody. They just gave him a trade credit for the recent outage.
Keep in mind the firm still needs to high expectation of profit from somewhere.
JPM just took a $143 million write down for concentrated margin assets going bad.
Our firm doesn't trade any with of them and we generate tons of commissions, but we use their balance sheet(s) and we trade lots of Eurex
If you can actually get to someone who does a trade cost analysis of your existing account they are going to look at a number of issues.
What you trade
Asset classes
Service required
ASSETS - ASSETS
Nobody, including an RIA will do it .
If you trading 10,000 contract a month, easily fit the platform and have a few million in non option assets you have a shot. Volume is somewhat irrelevant if you fit all the other specs.
The simple question - what size assets do you have to deposit/custody and are they US listed actively traded equities ? You don't have to answer it here, but if you are trading tons of options(You said no SPX and VIX) and doing it with a few hundred thousand dollars in the account - Forget It. You have a few $million dollars of SPY, APPL, AMZN, BAC and names like that it is a layup.
Size, well secured, diversified margin debt and also help you get a superior rate. Again they need a profit center.
If you're able to share the information, is it cheaper to trade high exchange fee products like SPX options through your setup with Eroom than with some of the regular retail brokers that don't separately pass on the exchange fees?My advice to you would be going with an smaller introducing broker such as Lightspeed or Eroom Securities (this is where I currently trade). Lightspeed will introduce to Wedbush, Eroom introduces to Apex and Merrill.
Dealing with these types of firms will get you excellent customer service along with good pricing.
Your next decision is what execution platform you use. Some will be free, others will cost monthly fees. This is important as it will help you control where and how your orders are sent and how much you will be able to receive in rebates. Its very possible depending on what types of orders you trade you will have a net rebate exceeding your commission costs.
If you're able to share the information, is it cheaper to trade high exchange fee products like SPX options through your setup with Eroom than with some of the regular retail brokers that don't separately pass on the exchange fees?
That's what I assumed based on my experience and some of your previous comments, but I haven't taken the time for the calls necessary to price the IB's out like it sounds like you have, so appreciate the info.It would be cheaper for me to trade SPX through a firm like Think or Swim (TD) I have a good rate now, but I have to eat the exchange fees which can be an additional .61. It seems most commission rates at TD include that fee. For equities I am much better off where I am now, plus with equities I tend to make money on providing liquidity credits.
I'm with you on that, nothing more frustrating. I've literally never had a limit order filled when it gets sent to the pit, even when it gets filled instantly when I cancel and resubmit at a smaller size so it goes to the COB, even if that is just a 1 contract reduction.@Sig, another thing to consider if you are mainly trading the SPX is how your order is handled. With most brokers, if your order is over a certain size it is sent to the broker in the pit. In my experience, this is almost never a good thing. All of my orders, no mater how big are sent into the exchanges electronic book or the COB. To me this is worth paying more.