We don't pay to locate or any extra to Goldman for shorting (loan) stock. A bit lower interest on "hard to borrows." may apply. Our interest rate differential is around 1.5 to 1.75 long $$ vs. short money. Of course actual rates vary. This is, again, one of the variables we do our best to negotiate with Goldman every year. So, yes the make money, but a relatively "small boat" in this regard, LOL. (and this saga continues, LOL) Don
Yes, I see very few of the zillion trade guys around anymore. Fewer larger share orders, saves on commish, and certainly a lot less stress. Very little "SOES" style, or 1990's style of day trading these days...some will always do it, which is fine, but more are doing larger per order trades. Don
wel, if you went to a smaller clearing firm like sws or pen they would make you a sweeter deal.....on the other hand you do enough volume to self clear....im sure its crossed your mind a couple times...but its a lot of work and bs and expensive...The number one problem prop and DT firms have when they go self clearing is??????? I'll give 100 bonus points to the first person with the right answer
Don is married to Goldman Sachs, who is exuberantly expensive. No one in their right mind that runs a high frequency operation would clear GS. Don is losing lots of potential traders to firms that are catering to the automated trader. In two years, when he is being squeezed and few if any traders sign up to trade at Bright, he may finally shop his rates with the myriad of other firms that could clear his trades. He will then have GS lower his rates when he threatens to leave, and he will notice that even those rates are uncompetitive. You can lead a horse to water... nitro
We tried other Clearing Firm(s), but way too many problems, and no savings whatsoever overall...and when you find out that your "bank" has less $$ than you do, makes one a bit nervous. Stuck with Goldman for many reasons. And, we figure GS can clear cheaper than doing it ourselves, we have explored that option several times over the years. Don
Don, 20M shares a month is nowhere near high volume by today's standards. Try 10M shares a _day_. nitro
I hope you are kidding me? After reading this, I had to call a few traders I know at GS and BSC...just to clarify. They don't know of anyone on their equities Prop desk that trades 10M per day average...that is.
I will thanks, as I know quite a few people that work there too. However, I believe we are talking about prop trading. And these people that trade 10M per day...what is their role there?
Well, since some of our "automated" guys tried Brand X (or Brand G if you will), and were forced to come back to continue writing to Goldman's API, I question that particular argument. We have dozens if not hundreds who use automation of some sort, from very basic to black boxes, FIX, etc. Goldman has a better overall package for our business model (interest rates, stock locates, etc.). Of all the trading firms that Goldman acquired when they took over Spear Leeds, I think they only kept us and Generic/Carlin. So, yes, that was a windfall for the smaller clearing firms, and we courted by all of them. But, since so few people really understand the entire package of a Clearing relationship, it took a while for us to become certain of our staying with Goldman. And, as I said, most firms are run by "managers" not owners any longer, so they just need to keep their jobs, not necessarily run a profitable business (I'm sure the "major" are doing fine however). I certainly don't need to defend Goldman, but our people there have always been very receptive to our needs, and we have adjusted our business practices, when we needed, to accomodate their requests as well. Some people may think we live in a vacuum here in Vegas. Over the last couple of years I have spoken directly with the heads of the major trading firms, discussed pricing and capital, interest rates, and all the rest. Generic/Carlin (RBC), Echo (Hi Rob and Jeff), Assent, ETG, and Swift trade (completely different business model however), and even a couple of smaller firms. We have met with, and discussed buying out, several firms over the years, including a couple mentioned above. We reviewed all their financials, billing, pricing, etc. so we know exactly where we stand. We decided that, since many of the traders were coming here anyway, we would hold off on any "acquisitions." Just a business decision like anything else. I encourage due diligence. And I encourage those with "sweetheart deals" to stay where they are, as long as they're making money. No reason for all this fuss, IMO. Things change, and these days things change at Internet speed it seems. All the best, Don