rumours of prop firms and the SEC

marketsurfer · Feb 16, 2004

i heard an interesting rumour at the expo this year---- i can not nor will not vouch for any truth whatsoever to it--- however --i was advised that----someone who is or was HIGH up in the prop world claimed that the SEC will be putting an end to the prop concept of high leverage very very soon.................... the person this was attributed to--is ( was ) highly respected...... once again--i did not hear this directly but from a third party--strictly rumor at this time.

who knows ?

surfer :eek:

BankerBlueChips · Feb 16, 2004

Quote from marketsurfer:

i heard an interesting rumour at the expo this year---- i can not nor will not vouch for any truth whatsoever to it--- however someone who is or was HIGH up in the prop world claimed that the SEC will be putting an end to the prop concept of high leverage very very soon.................... the person this was attributed to--is ( was ) highly respected......

who knows ?

surfer :eek:

That is ridiculous....... if that was the case then you are saying a GSCO, NITE or SBSH cant trade for their own proprietary account !!!
This is just a silly statement.

I have heard that unlicensed traders who are not registered with a firm, (those that trade part of an LLC in a prop firm) with increased leverage could be in jeopardy. That would make more sense then your blanket statement.

Banker

Steelhead · Feb 16, 2004

Quote from marketsurfer:

i heard an interesting rumour at the expo this year---- i can not nor will not vouch for any truth whatsoever to it--- however someone who is or was HIGH up in the prop world claimed that the SEC will be putting an end to the prop concept of high leverage very very soon.................... the person this was attributed to--is ( was ) highly respected......

who knows ?

surfer :eek:

surfer, whats up with you and your "rumors" lately,,, pretty lame

marketsurfer · Feb 16, 2004

Quote from BankerBlueChips:

That is ridiculous....... if that was the case then you are saying a GSCO, NITE or SBSH cant trade for their own proprietary account !!!
This is just a silly statement.

I have heard that unlicensed traders who are not registered with a firm, (those that trade part of an LLC in a prop firm) with increased leverage could be in jeopardy. That would make more sense then your blanket statement.

Banker

sorry for the misunderstanding----- i made a phone call for clarification ---and this is what i am told---- prop firms that provide the trader 100% payout and require capital contribution will no longer be allowed to provide greater than 4 x leverage. the traders will be classified as customers regardless of licensing.

as i said, this is strictly a rumor. please take it as such.

surfer

cornholetrading · Feb 16, 2004

Quote from Steelhead:

surfer, whats up with you and your "rumors" lately,,, pretty lame

Well if you go and look his "rumor" about MSFT possibly interested in buying Disney ended up true. That rumor seemed a lot more crazy than this one.

A little off the topic but where in the hell is this new list of all the stocks you can short on downticks?

Rearden Metal · Feb 16, 2004

What Marketsurfer is saying sounds very logical to me. The 20X leverage commonly provided by pro firms has always been a legal 'gray zone'. I would not be surprised at all to see the SEC do this. Don't shoot the messenger.

range · Feb 16, 2004

Considering all the regulatory changes in the investment business recently, the only surprise would be if there were no more changes. Surfer's rumor sounds plausible to me.

BankerBlueChips · Feb 16, 2004

Quote from range:

Considering all the regulatory changes in the investment business recently, the only surprise would be if there were no more changes. Surfer's rumor sounds plausible to me.

You are not thinking about this logically. If you are a prop trader, trading the firms capital.... and are getting a split of the profits..... even as high as 99%, then your theory doenst work.

Just cause a trader might get a 30% payout at GSCO, doesnt classify him any differently then a trader getting 99 or 95% at any of the "prop firms" we discuss on this board. It is up to the firm to decide trader compensation.

Whether its GSCO, NITE, Assent or Hold, a prop trader is a prop trader. Not all traders trade off order flow.... they trade proprietary accounts too !!!! When you think about it, this rumor is totally and completely illogical.

Banker

GATrader · Feb 16, 2004

Banker there is one HUGE diff between the gs, sbsh,nite and the pro firms like assent echo,et al.

While you can argue about the pnl payoff of 30% vs. 99% The traders of NITE,GS are not responsible for losses nor do they post performance bonds I.e. deposits.

i'mlong · Feb 16, 2004

it makes no sense. who says every prop firm gives 20x leverage? to make a blanket statement is ridiculous. some prop firms only give out 4x leverage based on the capital they have on hand which is the same leverage any margin account would get.