Broker Dealers and Prop Trading Accounts...

Discussion in 'Prop Firms' started by yobo, Oct 11, 2008.

  1. yobo


    I've been reading some interesting articles about how Goldman Sacs and other major banks are changing the leverage rules for their hedge fund clients and Broker Dealers.

    Can anyone who trades prop with a registered broker dealer comment on whether their buying power has been altered?

    Seems the amount of leverage available to professional traders and hedge funds is being tightened. Curious if this is impacting any of the firms often mentioned on this board like...

    Bright Trading

  2. yobo


    Anyone hear about about leverage and buying power being affected for prop traders?

    Hope not.
  3. i don't think it is.
  4. cstfx


    You could ask Don B about leverage on a licensed firm but I believe they only get 6.6:1 leverage. A non-licensed (read retail) is getting 4:1 unless getting portfolio trading margin. Either way, we are talking about 2 different animals in terms of trading. Hedge funds and PE get up to 30:1 loans on assets. This same leverage CAN'T be offered to b/d's or the sub-LLC prop shop, so in answer to your question, leverage offered a prop firm is probably not being affected. The leverage they extend to you, the trader however, is something different.
  5. in all seriousness i know of a few prop llc' type places that give phenominal leverage.
  6. cstfx


    They can give you whatever leverage they want. What leverage they get from their clearing/execution firm is pretty much standard.
  7. nebulous


    The B/D prop desk leverage question depends a lot on mandate of the desk - they trade cash in a lot of instruments so no 'leverage'. Think more in terms of risk management shifts - less unhedged overnight exposure being allowed in this market. These are the markets prop desks were created for though - buying power is not being restricted. Don't know about all aspects, but the equity side of B/D prop's going to have an outsized second half of 08.
  8. I've heard about some possible "tightening" of limts, nothing major. In our case we don't even get close to using our leverage capacity anyway. Can't comment on the other guys.

    I'll check with Goldman when I get back into the office, and bring you guys an update however.