WTS alliance with T3 Trading

My opinion on prop firms is simple, if you want to trade for a living and can't get leverage on your own, or can't get a job at a bank or broker that will hire you to trade, prop firms are your only option. I see over and over on this forum that many only seem to care about their "deal", rather than who they are getting into business with. I would care more about the character and history of those that I'm getting into business with for at least a year. The net capital they you focus on, is important. Risk management and running the business is very important too. Having lots of capital, as you say is not any guarantee.

When you join these firms, you take the risk of trading and the business risk. It will never be perfect.

1245
 
I'll take SgtSlotter's opinion with a grain if salt since reading his past posts its apparent he has an ax to grind with WTS and now T3.

My observation is this: The typical trader will put up $10k and get about $200k of buying power. Your $10k is at risk for a year since it is locked up. WTS and T3 have been in business for 7-10 years and are only getting bigger since most of the other prop firms have either merged or closed. I don't know of a real, licensed prop firm that went under and traders lost their money (but I could be wrong). And if there was one I'm sure they weren't as big as WTS/T3 are. So bottom line you have $10k up and just take your monthly profits. After a year you will get a good feel of the firm and notice any red flags. For example, if they start slow paying or cutting buying power.

I think all the focus on net cap isn't relevant for the typical trader here....and most of us.....or even "experts" like SgtSlotter, don't really know about the financing of the prop firm you are dealing with.
 
SgtSlottter said:
Why do you think that T3 is considered a customer of ETC?
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Because that is the essence of SEC Rule 15c3-3!

From the web...

"The purpose of Rule 15c3-3 is to ensure that in the event a broker-dealer must be liquidated that it will have sufficient assets to meet obligations to customers for securities and funds."

One of the main provisions of this rule is the "Reserve Formula" which states as follows, also from the web:

The Reserve Formula
This provision requires that a broker-dealer, unless exempted, must maintain a "special reserve bank account for the exclusive benefit of customers" and at all times maintain a balance therein computed in accordance with a formula set forth in the rule.

Since we know that ETC, from its own financials, maintains a special reserve bank with segregated funds of over $40 million dollars, and since the rule applies when a firm has customers, then by logic and default, T3 is one of ETC's customers as per SEC Rule 15c3-3.

On a side note, T3, on the other hand, does not have any customers, and even states the following in its financials: "The Company does not maintain possession or control of any customer funds or Securities, and is exempt from requirements of SEC Rule 15c3-3."

Therefore, ETC cannot be a customer of T3, but T3 can (and is) a customer of ETC.

The bottom line is the funds maintained by T3 are in segregated accounts of ETC at a special reserve bank, so again, why would a Class C member with a minimum capital contribution even worry about this stuff? Answer: they won't!

:)But I appreciate the discussion.
 
sonictrader said:
I'll take SgtSlotter's opinion with a grain if salt since reading his past posts its apparent he has an ax to grind with WTS and now T3.
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Yes, SgtSlotter has been yelling "FIRE" in a crowded trading room of WTS' traders, and now to those of T3, when no such fire exists.

To his credit, the main argument he has made (which I think is quite valid) is the capital of the owners. It is suspect when a firm that used to list the owner's capital in the SEC reports abruptly stops doing so.

If any trader wants to know this info, then all they have to do is ask the firm before joining, no big deal.
 
ScalperJoe said:
Because that is the essence of SEC Rule 15c3-3!

From the web...

"The purpose of Rule 15c3-3 is to ensure that in the event a broker-dealer must be liquidated that it will have sufficient assets to meet obligations to customers for securities and funds."

One of the main provisions of this rule is the "Reserve Formula" which states as follows, also from the web:

The Reserve Formula
This provision requires that a broker-dealer, unless exempted, must maintain a "special reserve bank account for the exclusive benefit of customers" and at all times maintain a balance therein computed in accordance with a formula set forth in the rule.

Since we know that ETC, from its own financials, maintains a special reserve bank with segregated funds of over $40 million dollars, and since the rule applies when a firm has customers, then by logic and default, T3 is one of ETC's customers as per SEC Rule 15c3-3.

On a side note, T3, on the other hand, does not have any customers, and even states the following in its financials: "The Company does not maintain possession or control of any customer funds or Securities, and is exempt from requirements of SEC Rule 15c3-3."

Therefore, ETC cannot be a customer of T3, but T3 can (and is) a customer of ETC.

The bottom line is the funds maintained by T3 are in segregated accounts of ETC at a special reserve bank, so again, why would a Class C member with a minimum capital contribution even worry about this stuff? Answer: they won't!

:)But I appreciate the discussion.
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Having been a BD before. I'm quite sure that if T3 is a BD they are NOT considered a customer of their clearing company. That's what I remember from the series 24 and when I was calculating my own net capital requirements. Its almost as if you are giving the clearing company a subordinated non-recourse loan when you (as a BD) deposit money with them. I believe this is also part of the reason why the FCM is not obligated to report your cash bond trading to the IRS.

I have no opinion / don't care about their solvency or financial statements. It's very hard to draw accurate conclusions from those as there are many reasons to keep a BD minimally funded.
 
garachen said:
Having been a BD before. I'm quite sure that if T3 is a BD they are NOT considered a customer of their clearing company. That's what I remember from the series 24 and when I was calculating my own net capital requirements. .
More...

Ok good to know, thanks for the clarification. Perhaps T3 (as a b/d) is a customer of the bank that holds the funds, and ETC is simply performing the clearing operations.
 
You guys are all missing the point.... this merger was all about routing and monthly fees !!!! These shops have all shown their hand to the street that they have a tough time turning a profit from their trading desks. The main source of revenue now is off the traders orders being directed to their controlled routes and charging for education.
 
I was with WTS for 2 years, but left last July. I found the firm to be a fairly honest place to trade. I don't see how anybody could trust the snake oil salesmen at T3 with their money. They're not an ethical company in my eyes.
 
Been with T3 since the transition and have had no issues so far.

However, I am with Integra which is a subgroup and is managed by an great guy, so maybe his efficiency covers up any deficiencies.
 
I think murotrading nailed it. The purpose of the WTS acquisition was twofold: the routes, and the education, both which improve revenue streams. Just ask any former WTS trader how many emails they have received from T3 regarding education.

If a subgroup is managing their traders well, then that is probably the route to go if you're going to join the firm.

The focus reports for 2014 will be posted to SEC.gov soon, so it will be interesting to see how the capital structure has changed since the WTS acquisition, for better or for worse.
 
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