Volcker Rule

[MoneyMatthew]

According to this article from trader magazine there is little chance that this thing will pass.

http://www.tradersmagazine.com/news/financial-transaction-tax-france-109811-1.html

I don't see how a prop firm can be exempt if this happens.

 

[CoraAG]

Quote from Don Bright:

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

Don, you're a constituent of the U.S. Senate majority leader's. You might want to make sure that he fully understands the industry and the impact such a tax might have -- particularly if applied in a ham-handed manner.

 

[Don Bright]

Quote from CoraAG:

Don, you're a constituent of the U.S. Senate majority leader's. You might want to make sure that he fully understands the industry and the impact such a tax might have -- particularly if applied in a ham-handed manner.

I have and will try to discuss this matter with Mr. Reid, much like I tried with the internet poker concerns....but I must say it's going to be tough.

Since it should affect only retail traders, and prop firms aren't retail, for many reasons, we should be exempt. We need to show a large percentage of profitable traders, and meet other stipulations as outlined by GS lawyers.

Even though it would be great for business to have a FTT on retail, I feel that I have a moral obligation to fight it. Much like our fight against the Series 7 *although that worked out well in the long run* - I feel that Americans have the right to engage in any legal business they desire. We also were recorded saying, in one of the panel discussions, that "trading should be left to professionals" - which is probably true, but who will become "professional" if they can't even start trading?


All the best,

Don

 

[Robert A. Green]

Hi Don. We discuss FTT in full on another thread.

FTT proposals in Europe are "cascading" on all parties to a transaction. It's not stamp duty like in the UK, where the UK exempts market makers and the tax falls on investors. The proposals if passed will affect transactions in America, where the counterparty to the trade is in a FTT country.

Geither and Obama said no FTT for the G-20 or U.S. because FTT penalizes investors to much. Obama prefers his bank tax -financial crisis responsibility fee - proposal on bank liabilities. They want to go after Goldman Sachs, not Joe Trader.

The U.S. FTT proposals have no exemptions and that would not fly in the U.S. where they are more focused on making banks pay for the crisis, not investors.

I strongly suggest you handle FTT matters on the Elite FTT thread and not here where some of these posts are not correct.

There is no edge for prop trading versus retail trading at this time. The only difference is retail is your own LLC and prop trading is when you are a member of another firm's LLC. Both profess to be liquidity providers.

If FTT from Europe hits the U.S. it will seriously hurt very active traders. Avoid it, by avoiding FTT instruments and counter parties. But, so far it's not passed. France is pushing it to help Sarkozy win relection in May, and they need 9 EU countries for enhanced cooperation. I doubt they have that vote count.

No way can FTT pass in the U.S. unless Obama changes his mind and Dems sweep both houses with filibuster proof vote counts.

I am the founder and leader of Www.TradersAdvocacy.Org where our main mission is fighting FTT.

Don, do you want to be one of our sponsors, along with FXCM?

 

[Don Bright]

Quote from Robert A. Green:

Hi Don. We discuss FTT in full on another thread.

FTT proposals in Europe are "cascading" on all parties to a transaction. It's not stamp duty like in the UK, where the UK exempts market makers and the tax falls on investors. The proposals if passed will affect transactions in America, where the counterparty to the trade is in a FTT country.

Geither and Obama said no FTT for the G-20 or U.S. because FTT penalizes investors to much. Obama prefers his bank tax -financial crisis responsibility fee - proposal on bank liabilities. They want to go after Goldman Sachs, not Joe Trader.

The U.S. FTT proposals have no exemptions and that would not fly in the U.S. where they are more focused on making banks pay for the crisis, not investors.

I strongly suggest you handle FTT matters on the Elite FTT thread and not here where some of these posts are not correct.

There is no edge for prop trading versus retail trading at this time. The only difference is retail is your own LLC and prop trading is when you are a member of another firm's LLC. Both profess to be liquidity providers.

Hi Bob, nice to hear from you. I'm responding to questions here, and have researched via GS legal teams. No one knows anything for sure, but the simple answers are that the FTT will not affect "liquidity providers" and that retail suggests SIPC, PDT, and all the other regulatory "stuff" involved. And, as I have said, we'll see over the next few months (or years as it seems to be going). My comfort level is pretty high at this point.

I recall having similar type discussions over the years, and we're still here, complying with all those "feared" end of the world type things.

Hope all is going well with you, my friend.

Don

 

[traderchi128]

Quote from Don Bright:

Hi Bob, nice to hear from you. I'm responding to questions here, and have researched via GS legal teams. No one knows anything for sure, but the simple answers are that the FTT will not affect "liquidity providers" and that retail suggests SIPC, PDT, and all the other regulatory "stuff" involved. And, as I have said, we'll see over the next few months (or years as it seems to be going). My comfort level is pretty high at this point.

I recall having similar type discussions over the years, and we're still here, complying with all those "feared" end of the world type things.

Hope all is going well with you, my friend.

Don

Don,

Not sure where you are getting your info from....but a few things:

1) A FTT tax would be devastating to everyone....retail, prop, hedge funds, HFT....every single trader out there. I have seen no mention anywhere that says certain groups will be excluded. I am not a retail trader and would be part of the "exempt" group you talk about, but let's be real...you think they are going to try and pass this thing, then exempt the people they are trying to go after? The retail people are probably last on their list of targets.

2) I know you are on here always promoting your firm (which is a very legit and long standing reputable firm)...but come on man....saying that this FTT will be great for Bright is crazy. It will basically cause Bright and every other prop group to close their doors. Volumes on every exchange will drop 70-80%....look what happened overseas when they put in this tax. Even if somehow the FTT was aimed at retail only (which will never happen), it would not help you guys.

3) Most importantly......there is a .00000000000000000001 % of this tax ever going into effect in The U.S. I am not sure how you come up with 50/50...but those odds are not even remotely close. If you are going with the "we are exempt thing....it will push all these retail traders to us" then sure..you are probably hoping for 50/50....but let's be real.....Obama shot this thing down....100 % of the Republicans are against it....it aint ever going to happen in The U.S.

 

[drayton sawyer]

hey traderchi128, i sure hope you are right!'

 

[traderchi128]

Quote from drayton sawyer:

hey traderchi128, i sure hope you are right!'

I still find it kind of amazing people in The U.S. even bring this FTT thing up. It has been brought up before numerous times over the years and been shot down with little to no support. I understand that in France it's a much bigger deal, but if/when they implement it, it will probably be repealed soon after. Volumes will plummet and the expected revenues from the FTT will fall probably 90% short of what they expected. I understand some of the guys on here that are fighting the fight vs FTT, and I am on your side 100%......but until this thing becomes a real threat over here (which is most likely never), people need to chill out.

 

[Don Bright]

If it doesn't happen, that's fine with me and the Firm. All I'm saying is that if it does happen, I'm told it's quite likely that we may have to make some changes in structure, but nothing devasting to our business model.

Not trying to simply paint a rosy picture for BT, just passing along what we are being told and advised.

Would love to hear from Echo/Merrill? Rob? Jeff? Generic, Ron? David? Any thoughts on this?

Don

 

[traderchi128]

Quote from Don Bright:

If it doesn't happen, that's fine with me and the Firm. All I'm saying is that if it does happen, I'm told it's quite likely that we may have to make some changes in structure, but nothing devasting to our business model.

Not trying to simply paint a rosy picture for BT, just passing along what we are being told and advised.

Would love to hear from Echo/Merrill? Rob? Jeff? Generic, Ron? David? Any thoughts on this?

Don

Your biz model may not have to change, but your traders will not be able to exist in an environment with this tax. The tax will wipe out short term traders, which I would guess is a majority of your firm. So sure...your biz model can stay the same....you just won't have any traders.

Again...the FTT has almost zero chance of ever being implemented in The U.S. .............but for you to take this "it won't effect us" stance....is....odd. Considering your firm would cease to exist with an FTT.