Sleazy= Extending more than 4-1 leverage to non S7 licensed traders.
Prop Trading Firms - Note On Threatening Regulatory Developments
- Thread starter traderob
- Start date
Sleazy= Extending more than 4-1 leverage to non S7 licensed traders.
Of course you're going to say that. They're your competition.
In the last sentence of the following paragraph it refers to "other changes brewing in the margin rules that can help retail traders" and also refers to "hedging margin". Does anybody know what this is referring to?
"We have hundreds of retail traders who do make a good living. We do agree that leverage can be helpful in making more money on a smaller capital size. But leverage comes with risks, too. There are other changes brewing in the margin rules that can help retail traders (hedging margin and more)."
"We have hundreds of retail traders who do make a good living. We do agree that leverage can be helpful in making more money on a smaller capital size. But leverage comes with risks, too. There are other changes brewing in the margin rules that can help retail traders (hedging margin and more)."
A series 7 or any other license does not make you a good trader..and there are many traders both in the US and abroad that use legitimate leverage services and competitive commission rates...
The best intro to trading is small size and $ exposure in live real trading...size and exposure goes up when profits start and are consistent...Boutique firms that want this business...to incubate traders with the idea of developing a professional long term client base have every right to stake their claim...
This is over regulation bull shit started by the likes of the small boutique market making firms that have market maker status...ie who have traders assigned to one or two stocks...and take full advantage of not having to adhere to the SS rule as do retail traders...These type of firms also do business for almost nothing because the trades are grouped at the end of the session and they are charged per ticket...
Having to have a 7 is bullshit....Leverage and preferential rates are rather simple professional needs...$risk is the name of the game commensurate with trading ability...
The best intro to trading is small size and $ exposure in live real trading...size and exposure goes up when profits start and are consistent...Boutique firms that want this business...to incubate traders with the idea of developing a professional long term client base have every right to stake their claim...
This is over regulation bull shit started by the likes of the small boutique market making firms that have market maker status...ie who have traders assigned to one or two stocks...and take full advantage of not having to adhere to the SS rule as do retail traders...These type of firms also do business for almost nothing because the trades are grouped at the end of the session and they are charged per ticket...
Having to have a 7 is bullshit....Leverage and preferential rates are rather simple professional needs...$risk is the name of the game commensurate with trading ability...
No, that's kosher.
Sounds to me like a lot of brokers are trying to keep the anxiety level of their own traders down by telling them that 'everything will be ok.' This makes sense to me, and I'd probably try to do the same thing in their shoes.
However, after reading a copy of the letter from one brokerage firm, as well as reading the article on Green's website, it seems clear to me:
In order to trade prop the following conditions have to be met (per the SEC/NASD):
1) Licensed S7 and S55
2) No deposit/assurance bond/any capital of the trader can be with the firm. Trader needs to trade firm capital
3) There has to be a sharing of profit between the firm and the trader (100% payouts do not pass the test)
=> Assuming this is true (and it certainly sounds that way from everything I have seen), then the arrangement at SwiftTrade would appear to be the only prop model that I'm aware of that meets these conditions. Per Green's article, this policy may be phased in over the course of a year, as each firm goes through their routine auditing process with the regulators.
In the short run, we can only speculate. However, I think traders need to begin planning for contingencies now, even if their firms are confidently telling them that they 'have no problem' to worry about. Nobody is going to look out for your interests as well as you should do yourself.
However, after reading a copy of the letter from one brokerage firm, as well as reading the article on Green's website, it seems clear to me:
In order to trade prop the following conditions have to be met (per the SEC/NASD):
1) Licensed S7 and S55
2) No deposit/assurance bond/any capital of the trader can be with the firm. Trader needs to trade firm capital
3) There has to be a sharing of profit between the firm and the trader (100% payouts do not pass the test)
=> Assuming this is true (and it certainly sounds that way from everything I have seen), then the arrangement at SwiftTrade would appear to be the only prop model that I'm aware of that meets these conditions. Per Green's article, this policy may be phased in over the course of a year, as each firm goes through their routine auditing process with the regulators.
In the short run, we can only speculate. However, I think traders need to begin planning for contingencies now, even if their firms are confidently telling them that they 'have no problem' to worry about. Nobody is going to look out for your interests as well as you should do yourself.
EricP I agreew your points regarding the owners of the firm trying to do damage control here. The 3 points you mentioned are not insurmountable for the firms.
1. Getting as7/55 -no big deal.
2. Requiring a deposit is where it gets interesting. What if Prop firm does not take a deposit in return for size limits + 5 cents a share? When trader goes green he can only take out 80% and leave 20% in a buffer account. After his 1st profitable month, that is his security deposit which mhe must built to $x, then after that he can take 100% per month. Most floor traders have that kind of arrangement -at least at the NYBOT where I got my start.
2a)What if he does not go green and waddles thru neg territory for weeks/months. That is the hard part.
3) profit sharing-what is the safe harbor? 98%, 80%, 50%. This is when the gov't has to get the Fu$%# out!!!
Another posted mentioned that s7 has no bearing on trading success. Of course it does not have any bearing any more than passing the bar woulc assure a fruitful legal career. It is basically a "cover your ass" move by everyone involved from the ClassA, regulators, clearing firm, etc Any field has to have a modicum of presentability and suitability as well as barrier to entry.
1. Getting as7/55 -no big deal.
2. Requiring a deposit is where it gets interesting. What if Prop firm does not take a deposit in return for size limits + 5 cents a share? When trader goes green he can only take out 80% and leave 20% in a buffer account. After his 1st profitable month, that is his security deposit which mhe must built to $x, then after that he can take 100% per month. Most floor traders have that kind of arrangement -at least at the NYBOT where I got my start.
2a)What if he does not go green and waddles thru neg territory for weeks/months. That is the hard part.
3) profit sharing-what is the safe harbor? 98%, 80%, 50%. This is when the gov't has to get the Fu$%# out!!!
Another posted mentioned that s7 has no bearing on trading success. Of course it does not have any bearing any more than passing the bar woulc assure a fruitful legal career. It is basically a "cover your ass" move by everyone involved from the ClassA, regulators, clearing firm, etc Any field has to have a modicum of presentability and suitability as well as barrier to entry.
Surf, it's a non event. They are going after retail firms that act as prop firms and they are going after firms that have numerous NASD infractions. Yawn.