I see so its for people who only have like 25K trading capital etc.. Kind of like someone going to a check cashing place to get a loan because they are undercapitalized.
There are many advantages but not really for the pure daytrader. If you hold overnights and daytrade then the advantages are huge. Example: Say you have 50k and your option positions on that tie up 40k. Then you want to put on some long/short equity positions but now you have no capital left for that. Now you say you want to daytrade. Well, no capital for all that either. The issue is in a Reg T environment your hands are tied because your capital gets locked up in margin. Again if you are simply daytrading, the advantages to going prop today are not what they use to be. But to the guy that wants to be more diverse in his trading and do many different things, then there are huge advantages to going prop.
(Back from my 2 week vacation/cruise to Amsterdam, Russia, Germany, Finland, Sweden etc. - whew, talk about exhausting, but fun). I can't say too much at this point, but the basic premise is that there is extreme pressure (so much that some "competitors" chose to just stop accepting new traders) to assure that we (and the other major GS firms) are "true prop" in that they don't have 100% payout traders). Reference: FINRA 10-18 - as previously discussed Our Accountant in Chicago who handles dozens of trading firms informs us that many are already changing policies too. Knowing that this was coming, we set up our JVC program where traders can qualify for a second account, no downside risk, and keep at least 50% of the profits. Read previous posts or feel free to call me discuss this. Our current traders have been advised of this upcoming event, and we suggested that those with adequate capital, take a $million or so and use IB for certain trades, keep a smaller amount to use the leverage here. We will help them with this. We are extremely comfortable that with the other major benefits we offer that most firms don't, and that the other major firms have already adopted this, that overall this will not have a big effect for most traders.
Yes, Dennis has done a lot to help us with lobbying against all the "stuff" going on out there. He joined my brother in testifying before the SEC a while back. His website has a lot of good info. www.defendtrading.com Check it out. Don
It has been my understanding that a prop trader cannot have an account somewhere else without their sponsor's (i.e. Bright's) permission. That is one of the considerations that lead me to rule out trading prop. I have been trading at IB for years, and all my software was written for their API.
I'm sure most, if not all of our traders have retail accounts (I know I do, LOL). Simply a disclosure issue to prevent any nefarious activity. . Don
Don, did you read Schonfeld's letter? Do you agree with him prop trading as we know is dying? How is volume over at your side?