If I'm not mistaken, the .0125 per share rate is for traders who join Pairco. These guys at Pairco get a piece of the action in commissions on top of what Bright charges them. The last time I went to Bright and talked to Don, the rate he was offering me was similar to what bighitter1 just stated - .007 for the first thousand and .004 for anything above that per trade.
Wait a minute. Let me see if I understand this right. The guys that are pairtrading, who are basically trading double the size volume to a regular trader, are paying two to three times as much as a regular trader? No way. No way these guys are taking home checks. I'm sorry many. That's analogous to a trader paying 2 1/2 cents a share to trade stock. Something is missing here. Nobody would pay those rates. When I started in NY in 2000, I paid 1.7 cents a share (.0170) and that was only because I was in a group. My rates dropped pretty fast when the volume went up. The margins just aren't there in pair trading to pay that much in juice. No wonder Don brags about his balance sheet all the time. LOL. If he really is charging that much I bet it's fat as hell.
The Pairco rate I just mentioned is a fact. That number came directly from one of the principals at Pairco who I had communicated with in the recent past. That rate was justified, according to this person, since they provided "training"and might even back a new trader financially on a case-to-case basis.
I just left Bright, so I can share my experience. Don't mean to speak for everyone there, though. It's a bit of a family operation, so I'm sure there are plenty of special deals going around. When you first join, you are essentially trading out of a retail account. You will get low leverage, get charged 0.0125/share plus $400/mo seat fees. When you pass your Series 7, then this rate will drop to 0.01/share. When talking to Don and others at Bright, they will tell you that this rate changes as you move greater volume. Others will tell you that your seat fee gets discounted as you move greater volume. From what I've seen, you get charged 0.01/share and $400/mo ($200 for remote) and then, based on volume, you get a rebate at the end of the month. If you trade a high volume and stick with Bright for a full year, you get an additional rebate. You can think of it as coming off your seat fees, or you can think of it coming off your per-share fees, but the net result is the same. Personally, I left because for my style of trading, the fees were killing me. I couldn't scale up because my margins were so slim. If you are holding overnight, or playing for larger moves, using a lot of leverage (e.g.: opening moves) then Bright's comission structure may work for you. They also have a lot of other perks, like the ability to borrow shares from a common account, giving you the effective ability to short on a downtick. And yeah, there's something to be said for having a broker that is unlikely to collapse and take all of your money with it.
Bottom line guys trading 2 million shares a month paying .007 i have a hard time believing many can over come 14k a month commissions plus another 3k or so in sec fee's and maybe 2-3 k in ecn fee's. that's 20k a month to over come
speaking about Bright type prop shops how are echotrades rates and fees compared?? are they similar or better then brights?
didn't one of the founders of PairCo, Steve Slavin, quit because pair trading wasn't that profitable?
That is correct. Darren Clifford bought out Steve's share of the business and teamed up with Steve's original partner Rob F.
that's 'cause doniz team teaches u to long and short 2 stocks in the same sector..maybe if they change it to long a strong sector and sell a weak one it cud be more profitable, maybe long defense to hedge against terrorism/war/etc and short somethin' like auto, retail, otherwise what u get 10c per trade? with those ridiculous commish??? and the risk is always there, u can get it horribly wrong like short gm when soon after gets upgraded and long Chrysler crap at the same time when auto sales come in weak as shite.