Not really since they would lose all the tax benefits and lose the "limited" part of "limited liability." Absolutely no reason for a sub-LLC. Our affilliates are individuals as members (to keep the tax benefits), and each trader with them is a member of Bright so they have the stability and safety of the entire firm vs. a smaller group. They function just the same, only easier and cheaper. All the best, Don
I was reading the thread about becoming our own broker dealer. I'm not sure why would you want to do that and go through all the hassle when you can do the sub llc deal? Therefore I'm sure it'll be a TON easier when you are interviewing prospective clients as they don't have to have a series 7 in order to join, plus not to mention you don't have to deal with ALL the paper work and junk of owning your own b/d Just my 2 cents
just outcuriousity,does someone have to have a series 7 to start a, LLC/sub group? how does one start a basic llc that offers sub accounts. i know this is beyond don's realm but enlighten me please.
Not so far away that I can't offer some help (I hope, LOL). If someone opens up a retail account somewhere, and put up maybe just 1$million or so, they could conceivably allow others within their LLC to trade a portion of the money. They would be restricted by retail margin rules and all that, but that is how some of these types of firms seem to be getting past regulations, at least until this point in time. FWIW, Don
so basically anyone can open a retail account with 4-1 margin and then offer sub accounts to friends? in order to do that,do they have to become an LLC for the retail firm to allow the account to be broken up or the retail firm has no idea this is going on?
here is how it works....You open up a retail account under the name..Warrior LLC....You put in 1 million dollars....the firm will give you 4:;;1 buying power intraday ...so now you have 4 million in BP....You hire a trader to work for you...he puts up 10k.....You 'give him' 10:1 bp or 100k.....that would leave your account with 3.9 million in BP to divide up among other traders you may hire.
Doesn't this FINRA leverage rule mean that for every dollar that's trading, someone must hold $0.25 in their account ? E.g., the *clearing* firm has to arrange for that 1:4 ratio, not the LLC. For example, Swifttrade wants to give a prop trader $1,000,000 BP. They have a 1:100 ratio deal with Penson (for example), so they've deposited $10,000 at Penson. Penson however, needs to have $250,000 in their account to give Swift that $1,000,000. So in other words, when a swiftie is trading with $1,000,000 he's trading $10,000 from Swift's money and $240,000 from Penson. Does this make sense or am I overlooking something here ? Notice that swift/title only have intraday positions (no overnight), this is probably also important to get that leverage
swift and title are not FINRA membes anymore as best as i can tell...the clearing frim can only give 4:1 bp on 25k or more....
I found both Title and Swifts B/D on FINRA. I am not sure if Title wants me to post their name. This is Swifttrade: http://brokercheck.finra.org/Support/ReportViewer.aspx?FirmCRD=127840 So (please dont take this as loaded im just wondering), because I trade everyday with over 20million BP, and my office has close to 40 million, do you think Title puts up 10m just for my branch?