Warning to anyone trading through an LLC

You, obviously, are not a fan of Milton Friedman, otherwise you would understand that regulation begs for more regulation to the point where a free market cannot function anymore. After all, what does free stand for in a regulated market. Of course people will get hurt sometimes, more than they anticipated when they took the risk, but by its nature, the free market will take care of that, while regulation will just create more distortion and mis-allocation of resources.
Of course, the state is more than happy to regulate everything to the hilt - that way politicians show that they care about people that "voted" them in, but we all know that the paternalistic reasoning never works. We are all mature human beings that like to think for themselves.

Quote from asiaprop:

I think its you who does not really comprehend how financial markets ought to function. People get rewarded for the amount of risk they assume. The payoff may be larger for more risk, taken, but it may also result in a larger loss. This is as far as theory goes. Practically, we need to go a step further: If there is a chance that the actual risk taker does not assume all the risk but that other, unrelated parties get harmed, then something needs to be done. That is exactly the original idea of regulation and how it generally works. If regulators do not care that some hedge funds collaborate to drive down a whole currency or companies in a concerted effort then that harms a lot of unrelated people and this has nothing anymore to do with sound economic principles. The same applies to our Mr. Always-Overhedged: If he sells calls and the next morning the company he traded is taken over and the stock surges 30% then he is forced to pay up. What if he does not have the funds to cover the loss? Declare personal bankruptcy? Sure, but thats only one part. Who covered the rest? The brokerage, other brokerage customers, an insurance policy held by the brokerage, society at large?

Markets are not efficient nor do people behave rational. I and nobody would care whether dudes with 100:1 leverage kill themselves BUT I and others do care when others get hurt. And government investors get rewarded for the risk of a AAA rated government fixed income product not a subprime mortgage loan or CDS contract. When money raised through the issuance of US treasury bonds is used to prop up a dead beat economy and especially dead beat companies then Chinese and Japanese and German investors have EVERY RIGHT to start asking questions. I thought that was pretty clear to most, apparently not so...
More...
 
One more thing. Those Chinese and Japanese and German investors that bought those AAA rated government products entered into a contract, and they have every right to ask questions, that much I agree, but a breach of contract is settled in court, not by adding more regulation, and I thought that was pretty clear to most, apparently not so. They think they have been duped by rating agencies, they have every right to sue them, or everyone they like.

Quote from asiaprop:


Markets are not efficient nor do people behave rational. I and nobody would care whether dudes with 100:1 leverage kill themselves BUT I and others do care when others get hurt. And government investors get rewarded for the risk of a AAA rated government fixed income product not a subprime mortgage loan or CDS contract. When money raised through the issuance of US treasury bonds is used to prop up a dead beat economy and especially dead beat companies then Chinese and Japanese and German investors have EVERY RIGHT to start asking questions. I thought that was pretty clear to most, apparently not so...
More...
 
I am never for overregulation, please dont get me wrong. But I think its time to close down a number of fx bucket shops whose pure existence serves to pull money out of peoples pockets through at the very least questionable methods. I think its no secret that successful traders get shut down at firms such as FXCM or the like.

100:1 leverage is insane and, again, I dont care if some guy hangs himself and completely blows up but the problem is that this has repercussions for the whole system and negatively affects a lot others. Dont you see what is going on really? Years ago, would retail have touched options? No way. But why not. Options were around for some time, fairly priced most of the time, and traded on orderly exchanges. Its a recent trend that retails chases riskier and riskier asset classes at higher and higher leverage levels because black sheep in this industry try to convince the masses that one can get rich overnight. Thats a lie. Nobody gets rich overnight. Trading is a marathon not a sprint.

I dont want overregulation but limiting leverage is a VERY PRUDENT thing to do right now. If some people dont understand that then its THEIR OWN problem, it does not make the fact wrong that risk and leverage needs to be reduced to return to a normal state in this economy.

Quote from telozo:

You, obviously, are not a fan of Milton Friedman, otherwise you would understand that regulation begs for more regulation to the point where a free market cannot function anymore. After all, what does free stand for in a regulated market. Of course people will get hurt sometimes, more than they anticipated when they took the risk, but by its nature, the free market will take care of that, while regulation will just create more distortion and mis-allocation of resources.
Of course, the state is more than happy to regulate everything to the hilt - that way politicians show that they care about people that "voted" them in, but we all know that the paternalistic reasoning never works. We are all mature human beings that like to think for themselves.
More...
 
All I was saying in regards to US government bonds was that investors did not sign up for assuming crazy risk but risk equivalent to the credit worthiness, liquidity risk, and interest rate risk of a AAA rated country.

The same goes with the average retail guy. When opening a brokerage account nobody signed up to be called at some day to hear the firm went under because some of its clients took huge risk and could not cover anymore what they were due just because they took outrageously leveraged risk. A client also does not want to end up with having funds stolen through delayed trades, trades executed at 100-200 pips away from the market which some shops call slippage (LOL) or the like. Curbing fx leverage will directly affect most of the bucket shops and hopefully force most of them to close shop which is in the best interest for the majority of people.


Whether the US still deserves its AAA rating is another question which I dont want to discuss.


Quote from telozo:

One more thing. Those Chinese and Japanese and German investors that bought those AAA rated government products entered into a contract, and they have every right to ask questions, that much I agree, but a breach of contract is settled in court, not by adding more regulation, and I thought that was pretty clear to most, apparently not so. They think they have been duped by rating agencies, they have every right to sue them, or everyone they like.
More...
 
what about Prop firms opening LLC sub accounts thru CBOE firms? Are they really registered with the SEC that way? Or is this just another loophole to bypass FINRA registration?
 
So is the SEC making an example of Warrior saying you are not allowed to have an LLC (branch/subsidiary) with a broker-dealer in any capacity?? Because I don't see what Warrior was doing wrong from glancing at the report. I would also like to know if this applies to CBOE firms as well??
 
SEC should just shut down every prop firm. This all would be less headache. IMO I can't even find a decent place to hold my licenses. good grief.
 
Quote from traderdave72:

I wish the SEC would stay the hell out of everyone's business. All this regulation is killing the average retail traders. I don't appreciate anyone telling me how I can use my own money. The SEC, CFTC, and NFA are a joke! I believe there needs to be regulatory bodies to oversee the financial markets to make sure they are operated in a fair manner. People like Madoff and insider trading should be taken care of accordingly but to tell a trader what he/she can do with their money is taking it to far. If I want to daytrade stocks with $5k I should be able to do it, If I want to trade forex using 400:1 leverage, I should be able to do it. The NFA just implemented a new rule in forex which only allows a 100:1 maximum leverage at U.S. brokers but now the CFTC is trying to implement a maximum of 10:1 leverage. Daytrading margins at futures brokerages equal leverage greater than 100:1 and they are not being challenged.

When will all of this regulation stop? The SEC now wants to enact the uptick rule in certain circumstances. It won't be long and retail trading will be out the door and many full time traders will be without a job. As of now U.S. residents can seek overseas accounts and get around the NFA, SEC, and CFTC rules but I'd be willing to bet it won't be long and U.S. residents won't be able to open overseas accounts. I am fed up with all of this BS regulation and how they try to make it sound like they are "protecting" the retail trader. If they want to protect us then leave us the eff alone and let the free markets work the way they are supposed to, not with government intervention.
More...

well said...
 
It is very simple. Every unregistered prop firm should be registered with the SEC and be required to file quarterly statements and pay the fees. daytraders should be protected too from all the shenanigans going on with all these unmonitored sub llc accounts.

Before I put up I want to know how much money the prop firm has under its wings and not worry about some shady chop shop going under any day.

IMO
 
You must log in or register to reply here.
Back
Top