Hi guys. For those of you who trade at prop firms, is it common practice for the firm to lock part of your capital down for 1 year? I thought this was true for firms that use trader capital contributions toward their net capital computations. But as far as I know, that's not common anymore, due to regulatory action. Can anyone comment on the safety of these structures?
Safe from regulators eventually knocking on the prop firm's door, that is, if they are using trader capital as for their own net cap reporting.
Per the Securities and Exchange Commission it is mandatory that prop firms hold back funds for a period of one year.
Do most of your traders fall under the Class-B model? I've always wondered how Bright groups work -- if they're different from the standard prop K-1 setups, which seem a little shaky to us from a regulatory standpoint.
I've heard this too, for the majority of firms out there. Haven't tested the waters yet to see under what conditions that applies, because I know a few places where it doesn't.
I would be glad to connect you with my Compliance Officer, she's the best in the business (Spent 15 years as head regulator on the Exchange). Don
With regard to certain firms choosing not to hold deposits for the one year period, let me add that just because a firm doesn't impliment something doesn't mean it doesn't apply. SDV, LLC lets anyone trade at their office without registering their traders. This is a clear violation. The fact that they do not register people with an exchange or the NASD doesn't mean that under certain circumstances registration doesn't apply.