Thank Goodness that Bright Trading has the best of both those scenerios...and you are right about those leases (we won't mention any names, but you know who we mean with all those open leases, no traders, etc.). This is another problem with these "sub-llc's" ....they try to get out their obligations by suckering in mangaers and others to take their leases. It makes one wonder how they do business in general. As you know, Gene, my point to all people is to get to know who they're dealing with, check the financials, and try to develop a sound business relationship. Don
Seems you never miss an opportunity to run a Bright Trading commercial Don. And it's funny how every opinion that challenges yours is "sour grapes" or "bias." Everyone has a motive but you huh? You know there's lots of reasons people post on these boards including: (1) A genuine interest in helping and learning from other traders (2) An ego boost from with exhibiting their knowledge in front of several people (3) The opportunity to promote their firms Guys like Gene are aren't defensive about criticism, they KNOW their facts, and they don't use Elite Trader as their ongoing marketing campaign. That makes him, and others like him, at least appear to be driven by reason #1. You on the other hand, seem constantly "infuriated" or "shocked" when others even think of questioning your motives. Makes a person wonder which of the three reasons is your motivation for being here.
You seem to express your displeasure more politely than most, and don't seem to have an agenda, and I respect that. Many of my comments are simply just a response, sometimes "tongue in cheek" sometimes just rebuttle....and I try to keep a sense of humor about the whole thing. Many times my "completely honest, with helpful intentions" comments are so taken out of context that it bothers me somewhat....but hey, it's just an internet board, and I like staying in touch with the many who are involved. No big deal....
Folks, To repeat something I said on another thread -- while we may not agree with everything someone else says, nor may we agree with their approach to saying it, I ask that all refrain from personal attacks. If not, I will "clean up" or delete your post. As always, a little civility goes a long way. Thank you.
Gene, I find your analysis somewhat tainted. A small trading office say 10, can trade easily 12 million shares a month. It seems most firm now charge a penny a share .01. That is roughly about 120,000 a month they generate from commissions. Rent for an 1500 sq ft office space that is not in nyc or sf, can cost around $15 per sq ft so the monthly rent is $1900. Lets say that the average trader trades 1.1 million a month. Thats only 50 some thousands shares a day. So a rebate is about $600 at that point, adds up to $6,000 the firm pays out. Now each trader pays $700 month(almost standard). thats $7,000. What the bd might pay to the clearing firm.... .0035 per share. Cable, phone, etc... $1,000(very high number) Data vendors/outside software $4,000 1st month start up costs 50,500 20 comuters for 10 traders at $30,000 50 monitors for 10 traders. $9,500 Server equiptment $3,000 10 chairs - $2,000 10 Desks - $2,000 10 phones - $2000 monior stand/rack - $2,000 --------------------------------------- First month of operation +120,000 - 1,900 - 6,000 + 7,000 - 42,000 - 1,000 - 4,000 ----------------- + 72,100 - 50,500 -------------- + 21,600 profit first month 72,100 profit 2nd month 1st year for one office!!!!! 21,600 + 793,100(72,100*11) = $814,700 for 30 offices...... lets just use $500,000 a year times 30 = 1.5 mil Frim A has 20 million and growing 1.5 million a year. 300 traders deposit 25k min is 7.5 million of trader equity Also, there are also charges like bullets, haircuts, and interest that we did not touch upon. As you add a trader to an office, the profits just keep rising. So where is the risk at Firm A? Firm B looks very scary, much easier to take down. conversions are not a risk to the firm since they are delta neutral. Bullets are no risk, just carring on puts. Don;t forget not eveyone holds pairs overnight... A trader that loses his money loses his captial first.... I know traders that have over several hundred thousand! and some 50,000. you have got to be kidding about choosing to trade at Firm B... Why trade there? just my thoughts... anyone care to respond? a larger firm makes more money... and where do you come up with that commission at .005? oh i see..some offer a max cap, but only a few select styles can you trade 5,000 shares a pop to get your rate down to .005. right?
hotlanta, The examples I gave were not any real firms, but I was trying to get my point across. The firm with the higher overhead(larger operation), will have more problems in a recession or slow down in trading. Firm "A" will be at risk in a slowdown in trading. Remember a spreadsheet may not work in reality. Not all of the large firms offices are trading 12 million shares a month. Traders may be leaving the business faster than the firm can recruit new traders(reality). The .005 was a firm in the NYC area, that was charging these low rates to steal traders . After traders get these low rates, the rates cannot be raised even if the firm is in danger of going under. Say the firm charges even .01. Not everyone is a 50k a day trader! How many traders do you know that trade 50k a day profitably and are not churning in these market conditions ? Many firms that offer .01 rates and lower must have their traders trade 40 to 50 k a day to stay in business at these low commission rates. One of the misconceptions traders have is that a bigger firm is necessarily safer. Firm "A" had carried alot of match pair/risk arb positions and had a 2 million a month overhead. Remember , it takes time and money to shut a business down . If the firm lost all their traders , in a short ten months they would have no capital left(Class A owners). If firm "A" was concentrated in a risk/arb deal that went bad, they could lose 10 million in capital very easily. What if firm "A" had all their traders raided by another firm(or the top producers)? They would be in serious trouble . It takes time and money to downsize a business. My point was made to show that a large firm that sounds well capitalized may also have problems. Obviously, firm "B" is small and firm "A" offers economies of scale. So the choice is yours based on your own experience. In all fairness to Don & Robert, both ECHO & Bright are fine firms and seem to be well run. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
It goes without saying but Gene is just a class act and brings a real contribution to the boards. Thanks Gene! JK
JWKirkland & mrktwiz , Thanks for the kind words. Let work together in the trading community for the benefit of all. Personal attacks really don't help anyone. Speak to everyone tomorrow. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net