Self Clearing Firms

Originally posted by InyOutty
Do you think you could respond to my previous post when you have a chance? Thx


Restated for your convenience...

04-20-02 11:52 PM

Don
Just being a curious George here...What kind of volume/size do your traders do who pay "less than .3 cents per share?"

According to my calculator a guy would have to average 8400 share trades to pay under .003. How many folks do you have that average 8400 shares a trade? And does this include ECN fees if applicable? All the traders I know who previously used the cap (before decimalization, Direct+, ECNs, and increased fragmentation) rarely use it now. I can't believe there are that many traders, other than position traders who are a minute minority, who still benefit from the cap. Just wondering...Thx
More...

Sorry to have missed your previous post (you know I'm pretty shy about the number of posts I put up!).

With a 2500 share cap, and volume rebates, members of our 4million/mo club who do 8-12K share blocks can get to that point. These are mostly "banks" players and some M&A guys.
(Feb: approx 90 traders received about $100K in "cap rebates" )...
Don
 
The cap is practically dead. Only a handful of guys do 10,000 share blocks these days. Direct+ and decimalization have sliced order sizes dramatically and executions today are much more piecemeal. ECN infiltration into the listed market will only further this trend.

Don, your trader's mean average cap rebate in February was $1100 (100k/90) but I'd be willing to wager that was nowhere near the median average (i.e. I'm guessing only a minority of those 90 traders got rebates approaching $1100 or above).
 
I posted this over the weekend, so I doubt you had a chance to read it...here it is again.

04-20-02 09:12 PM
DON...
Some of the numbers being thrown around on this thread have gotten me very curious. Please answer a few questions for me.
1) What is the average monthly volume for a very big trader at your firm? ( By big I mean in volume #'s not $).
2) What would a guy like this be paying per share and for ECN's?
3) Does he keep all his profits or is there a split?
:confused:
 
I've worked and financed traders, and clearing cost including passthrough and sec fees can work out to 0.002 cents. The low cost is a function of what has been mentioned on this thread.


I know of a 10 man trading group that does about100million shares a month. When you break down the cost after all fees, they pay around 0.002.

You can have an arrangements with clearing firms on the type of securities you trade. If you trade a few stocks let's say CSCO and SUNW you would pay a $25 ticket for the day on any amount plus a 0.001 cents.

It doesn't matter whether you get the commission down to zero, the question is whether you can make money trading.
 
"It doesn't matter whether you get the commission down to zero, the question is whether you can make money trading."



I agree completely. My question about commission prices are to find the way to keep the largest % of what I take out of the market.
 
Originally posted by VOLUME
I posted this over the weekend, so I doubt you had a chance to read it...here it is again.

04-20-02 09:12 PM
DON...
Some of the numbers being thrown around on this thread have gotten me very curious. Please answer a few questions for me.
1) What is the average monthly volume for a very big trader at your firm? ( By big I mean in volume #'s not $).
2) What would a guy like this be paying per share and for ECN's?
3) Does he keep all his profits or is there a split?
:confused:
More...

1.Our average trader does between 1 million -1.4 million shares/month (2001 figures).
2. Depends on trading style (whether cap rebates are used), I would guess around .75-.80. (some pay much less with cap). INcluding all ECN fees (we don't bother adding ECN fees in).
3. Traders keep 100% of their net trading profits, no split.

I haven't checked the numbers this year overall....share volume is probably down somewhat.
 
Originally posted by ShortIgnorance
The cap is practically dead. Only a handful of guys do 10,000 share blocks these days. Direct+ and decimalization have sliced order sizes dramatically and executions today are much more piecemeal. ECN infiltration into the listed market will only further this trend.

Don, your trader's mean average cap rebate in February was $1100 (100k/90) but I'd be willing to wager that was nowhere near the median average (i.e. I'm guessing only a minority of those 90 traders got rebates approaching $1100 or above).
More...

This is like adding another 10% overall savings to the trader...every little bit helps. Remember our traders don't do a lot of Naz trading which makes it much more likely that they will do much larger per trade size (not worried as much about "slippage").

I'm not sure what the point is to all the "dicing up of costs" - we keep it low, simple (no add on ECN's, etc.), our traders do fine, and we are in a position to provide stability and financial security...and will be able to stay competitive while other firms "price themselves out of business' (just trying to keep a few traders).....That's where I see the real concern, is having a "monthly nut" (overhead) to try to maintain....we choose a different, more flexible path.....

Isn't that where this thread started....?? ;-)
 
Thank you for providing the thread with some believable numbers. Your numbers seem to concur with my assumptions about how some firms can charge their 'props.' zero commish if the firm is getting a big enough split of the net.

Of course this leads right into your statement about making money trading and Volume's remark about keeping more of what he takes out of the market.

In my personal experience I have not found it exceedingly difficult to make money trading per se, it is the burden of commissions that has always plagued me. Not having to constantly concern one's self with accumulating commissions is a tremendous advantage when you are an active scalper (500K+ per day). If you are free to move in and out of stocks, concerning yourself only with the cost of the route you choose (ECN, Supersoes), you can exploit the smallest of moves all day. While some purists may not consider this truly 'trading', I myself am not bothered by semantics. I trade for an income, not to be identified as some kind of predictive genius. Ah......, but I digress.

I am just happy that we have finally put some numbers out there that show clearing deals can be made, and firms that are willing to take some initiative can give active traders an advantage, especially in markets like these.

MACD :cool:
 
Thank you for the numbers. I can only assume that if an average trader is doing 1 to 1.4 million a month and paying .75, then someone doing over 10 million a month would be drastically less...am I correct??? If so, is there a number you could throw out for 10 mil+ per month?
 
Originally posted by VOLUME
Thank you for the numbers. I can only assume that if an average trader is doing 1 to 1.4 million a month and paying .75, then someone doing over 10 million a month would be drastically less...am I correct??? If so, is there a number you could throw out for 10 mil+ per month?
More...

I will be glad to share with your during your "new trader orientation" ceremony here at Bright Trading. :-)

We have to keep our "edge" for our traders somewhat within the organization. We actually have the "120 million share/yr. club" with several members already.

Don
 
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