Prop Trading Firms - Note On Threatening Regulatory Developments

Maverick74 · Oct 9, 2006

There is a lot of erroneous information going around on this thread. First of all, the SEC is cracking down on ONE firm. They are doing this on a case by case basis. They are focusing on RETAIL firms that are acting like PROP firms. This will not affect JBO's and I doubt it will have any effect on the Echos, Bright's, or Assents of the world.

I don't know why you guys are waiting around for God to come down frmo the heavens and speak about this. These prop firms don't have spokespeople that come on ET to make public announcements. The reason they are not posting on here is because there is nothing to say. As of now, the SEC has taken action against one firm and one firm only. I believe Don Bright has stated both on this board and to me personally that they spoke to his firm and explained exactly what they are doing.

Don Bright · Oct 9, 2006

Quote from riskarb:

Response to Ang: I can't imagine how Bright Trading will avoid impact from the NASD-led action.

We're exchange members, not NASD members (FWIW).

Don

riskarb · Oct 9, 2006

Quote from Don Bright:

We're exchange members, not NASD members (FWIW).

Don

FWIW, I stated it was LED by the NASD. I believe the SEC would enforce. The memo clearly states "S7" traders at 4:1 going forward. I don't think "retail prop" is an issue regarding this specific firm. You guys can spin this however you like. I am simply relaying info I received in two emails from longstanding et members who trade prop.

Maverick74 · Oct 9, 2006

Quote from riskarb:

FWIW, I stated it was LED by the NASD. I believe the SEC would enforce.

Mav, the firm I cite has a JBO.

I'm aware of the firm that was cited and it was for a regulatory violation. Being a JBO does not excuse regulatory infractions.
No one is above the law to that extent.

riskarb · Oct 9, 2006

Quote from Maverick74:

I'm aware of the firm that was cited and it was for a regulatory violation. Being a JBO does not excuse regulatory infractions.
No one is above the law to that extent.

OK, sure. My point is that it seems beyond a coincidence that this happens shortly after it's reported by Green. The memo states that this action is being taken by the SEC on "advice" from the NASD. I found that rather odd, but both guys reported it verbatim.

Maverick74 · Oct 9, 2006

Quote from riskarb:

OK, sure. My point is that it seems beyond a coincidence that this happens shortly after it's reported by Green. The memo states that this action is being taken by the SEC on "advice" from the NASD. I found that rather odd, but both guys reported it verbatim.

Pure coincidence. While I'm not privy to exactly what the infraction was, I've been told that the firm was a habitual offender. There are many firms that apparently are habitual offenders of certain violations and would be fined in the past. I think going forward the SEC is going to aggressively go after firms that are habitual offenders.

riskarb · Oct 9, 2006

Quote from Maverick74:

Pure coincidence. While I'm not privy to exactly what the infraction was, I've been told that the firm was a habitual offender. There are many firms that apparently are habitual offenders of certain violations and would be fined in the past. I think going forward the SEC is going to aggressively go after firms that are habitual offenders.

Could be. I guess we'll find out soon enough.

Rearden Metal · Oct 9, 2006

Ok, I pulled myself together and found out what's going on.

I can't go into detail, but I now share the same position as Mav & Don. At this point it looks like only sleazy firms have a problem. Reputable firms should be ok.

giggollo · Oct 9, 2006

Is there an objective measure of "sleazy" and "reputable"? I think if there is a rule in place, it will be applied across the board, hard to imagine otherwise. I don't think the SEC is in the business of doing anybody any "favors"

Shreddog · Oct 9, 2006

Quote from giggollo:

Is there an objective measure of "sleazy" and "reputable"? I think if there is a rule in place, it will be applied across the board, hard to imagine otherwise. I don't think the SEC is in the business of doing anybody any "favors"

I think it's called Reg T.