Volcker Rule

Quote from MoneyMatthew:

I'm simply asking if "retail" prop firms like Bright, Echo and WTS will still be able to provide leverage if this goes into action?

Does Bright get most of its leverage through Goldman Sachs? I know the trading transaction tax will hurt everyone if it happens. I want to know how this will impact the independent retail prop traders. Not those who get paid a salary and put up no money at a prop desk.
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We never need to use GS for "leverage" - don't need to. We also shouldn't be affected by transaction taxes, only retail. B/D, Series 7 takes us off the "retail" list altogether.

FWIW,

Don
 
Quote from EvOTraderV2:

I doubt it'll affect leverage. The financial transaction tax was DOA in the states. the clearing rates will probably rise and so will the software & regulatory fees.
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Not so sure about DOA in the States, I say 50/50 at this point in time.


Don
 
Quote from MoneyMatthew:

Thanks for the reply Don. What is the worst possible impact from all of this for prop firms like yours and the traders who trade there?
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If you're asking about the FTT, then it's all positive for our traders. We will be exempt, as things look today. It's the retail traders, who will have to pay this outrageous tax. I expect a big surge in Bright Traders when this takes effect, and many are planning ahead right now.

If you're referring to something else, let me know.

And, check out my request for suggestions in the other thread.

Thanks,

Don
 
Quote from Don Bright:

If you're asking about the FTT, then it's all positive for our traders. We will be exempt, as things look today. It's the retail traders, who will have to pay this outrageous tax. I expect a big surge in Bright Traders when this takes effect, and many are planning ahead right now.

If you're referring to something else, let me know.

And, check out my request for suggestions in the other thread.

Thanks,

Don
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Who are you hearing will get exemptions?
 
Will other prop firms like WTS or Echo be exempt as well?

From what I am reading the tax would be 0.03 percent per transaction.

Will each share be counted as a transaction? I hope not. That means if I go long or short 100 shares of a $100 stock then I am paying $3 to get in and $3 to get out. That is $6 overall for one complete trade or "round turn".

I really hope I am wrong in my example above. I'm not a rebate trader but that will even hurt a trader like me who does 20 to 30 trades per day.
 
Quote from MoneyMatthew:

Will other prop firms like WTS or Echo be exempt as well?

From what I am reading the tax would be 0.03 percent per transaction.

Will each share be counted as a transaction? I hope not. That means if I go long or short 100 shares of a $100 stock then I am paying $3 to get in and $3 to get out. That is $6 overall for one complete trade or "round turn".

I really hope I am wrong in my example above. I'm not a rebate trader but that will even hurt a trader like me who does 20 to 30 trades per day.
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OK, here's how it works. 3/100 of one percent of the total dollars spent.

100 shares of IBM at about $200. $20,000 right? Let's see. 1% would be $200, 3 hundreth of that is $6.00 - FOR every hundred shares, man. 2,000 shares would be $120 - a total deal breaker.

Don
 
Overall if the FTT goes through I don't see how this helps prop traders if there are less participants in the market overall and less liquidity in the market.

Am I missing something here? Can someone help explain how this may be a benefit for prop trading because of these factors? Other than the fact that more people will move from retail to prop trading. That may benefit the prop trading firms but how does this help the trader?

It would seemingly kill retail trading if they impose the .03% tax that has been mentioned here. Retail trading is already expensive as it is.
 
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