Best futures broker

Discussion in 'Index Futures' started by eagerbeaver, Nov 6, 2005.

  1. I'm at IB right now and ready to bail because of their bug-ridden TWS. I know a lot of folks are in love with Velocity, although I'm concerned, in these days of Refco, that no accounts are insured against dealer failure. So, thoughts, anyone? Who's best for a 10 contract ES retail trader, 4-to-5 round trips-a-day, and are any of y'all concerned about the lack of account insurance (i.e., futures trading being "risky" enough without adding the additonal "x" factor of latent broker foolhardiness) Thanks.
  2. Three things to keep in mind when you look for a broker:

    1) Number of years in existence. (I think Refco was only 35 years or so. You need something way more than that.)

    2) Cash flow generated from operating activities is a good indication of financial stability.

    3) Go with a brokerage with exteremely low debts on their books.

    I don't know if such a futures brokerage exists, and I have only just began my search. Good Luck.

  3. i am already looking into several options to protect all of my various brokerage accounts, but i am now of the thought that there is no real protection anywhere!

    IB or FCM, 2 years in the business or 50, there is no credible protection against humans who chose to steal --- none {not even of the Refco magnitude --- wow astounding} !

    For a CTA or CPO fund, i am also looking at methods to insure all of the principle for a client in a way which will offer true protection and at the same time not add exceptionally highs costs. the client would have an understanding of the funds targeted performance on a yearly basis and the funds insurance costs would be absorbed with other normal costs by the fund managers --- so the client would know what their targeted return {1% a month} would be after all the costs involved were covered {a 10% to 15% a year annual return knowing that your principle monies are insured for no loss each year --- this appeals to large asset clients especially}.

    i have a lot more research involved with this idea, but it seems like this may be a need going forward to protect clients, fund managers, and retail traders accounts.

    any opinions?
  4. I'm glad to see I'm not the only one concerned about this. All the attention any good, successful trader must pay to risk management -- well, isn't it, ultimately, for naught if he/she hasn't taken into consideration protection of his/her cash account.

    To IB's credit, all accounts are insured up to $25 million (or is it $30 million?). True, insurers -- even the FDIC -- can fail, too. But, like asteroid strikes, these are risks that one may, rationally and responsibly, decide to take.

    But in a world of Refco, why the hell would anyone go with, say, Velocity Futures? Again, not to pick on Velocity -- I've heard nothing but great things about them -- but still...I come back to the issue of risk management. How can I manage the not-entirely-remote risk of broker failure? Perhaps, quite simply, by avoiding brokers who do not insure clients' cash accounts?

    In a sense, when we open an uninsured account with a Futures Broker, are we not assuming the unknown risks taken on by the brokers' other clients? How do I know whether Velocity (again, sorry -- not to pick on them, just an example) has a client that's another Long Term Capital Management in the making?
  5. I chose RCG because they have been around over 80 years and because of their financial stability. REFCO's writing was on the wall going back for years with the fines they had paid. Nothing is ever 100% safe, but if you do your homework, and sweep your account weekly then the odds are pretty low you will get burned. I will also add that bigger is not better, bigger just allows more mismanagement to go on within the organization.

  6. Beyond the obvious size and reputation considerations the primary focus should be on the firms risk management systems.

    It is quite obvious now that Refco had VERY POOR RISK MANAGEMENT which lead them to their demise.

    This is no different than most financial institutions that go under. Remember Barings Bank? Their risk mgmt. was a joke.
  7. ozzy


    How much does it cost to open your own operation (clearing + broker + whatever else is involved) ? Just curious.

  8. FredBloggs

    FredBloggs Guest

    yes the risk management at berrings was a joke, but what has that to do with refco llc the futures brokerage?

    one had a prop division that it didnt understand, the other was a brokerage (REFCO LLC) taking minimal risk on customer positions. THIS WAS NOT THE CASE FOR REFCO INC of course!! but that wasnt risk management systems or lack thereof that were the issue, it was just old fashioned greed, dodgy accounting and fraud.

    refco inc and refco llc are not the same company, although refco llc was part of refco inc.

    refco llc the future brokerage never went bust and all customer funds were and are safe.

    if refco llc is such a dodgy outfit, how come it is being sold for almost twice its cash value?


    refco inc went bust, with all the hits being taken on unregulated funds.

    what happened at refco is more of an argument FOR trading futures in segregated accounts (refco llc) v trading forex in an unregulated industry like otc (refco inc or refco capital markets).

    why is everyone so worried about futures brokerages here, when we have proof that the regulations in place actually work?

    i think what happened at refco is more of an indication to how safe your cash is when held in regulated brokers with segregated accounts.

    ie stay away from fx/otc
  9. big ed73

    big ed73

    I think that is only for the securities accounts, not the futures accounts. I checked with many Futures firms and none insured customer funds.

    Are you sure IB insures futures accounts as well?
  10. def

    def Interactive Brokers

    IB sweeps excess cash (not required by margin) at the end of each day into the securities account.
    #10     Nov 6, 2005