Hello everyone, Looking to join a prop. trading firm in NYC and after shopping around a firm has sent me a contract along the rates of: platform fee:$250 .0055 <100,000 .005 < 100,001-250,000 and profit split 99%trader/1%firm is this typical? Please let me know thanks
most firms that will lend to someone with minimal volume like that will charge .007 to .009 so i'd consider that lower than average. here are the fees from bright trading - http://www.stocktrading.com/fees2011.html - not sure what don charges for software. Fee Structure Bright Trading NEW FOR 2011 New / part time traders (Under 200K shares per month): .007 with .003 for shares above 1,000 per order. (Over 200K shares per month): All shares: .005 with .003 for shares above 1,000 (Above 1 Million shares per month): All shares .004 with .003 for shares above 1,000 (Above 2 Million shares per month): Shares above 2 million .003 (Above 5 million shares per month): All shares flat .003 Over 10 Million - Call for rates -- No ticket charges -- Pass through ECN rebates and fees
If it is a CBOE / CBSX firm it is outright illegal to have that profit split and the firm will be shut eventually. (Google the October 1st, 2010 memo to CBOE and CBSX firms saying that all or 'virtually all' split going to the trader will be considered a customer account). As a customer account, all kinds of violations are in place (margin should be reg t, money should not be co-mingled, suitability, fiduciary duty...) So it already sounds fishy. On the rates, does it include ECN fees or not?
actually, the profit splits are what differentiates a prop broker-dealer from a retail broker-dealer. It's important to know the differences. Prop dealers have different rules and regulations than retail firms. Changing the profit split during the duration of the contract is illegal, however, if a profit split is established it, it must remain for the duration of the contract. There's mass confusion on these boards regarding prop and retail brokers and what the rules are. Reg t is applicable to customer accounts for retail. if you joining your prop as a class b member and they require fingerprinting/u4/licensing/etc. I would not worry about "all kinds of violations are in place" because these firms are very highly regulated and are audited at least once annually. view source: http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=12&PART=220&SECTION=7&YEAR=1999&TYPE=PDF
You are the only one confused. Everyone else on this board knows about prop splits. Ask Don Bright about his inquisition regarding Goldman's 80/20 split requirement. Your link is not the right one. Here is the one that helps to define prop vs. customer for CBOE and CBSX firms from 10/1/2010 ( https://www.cboe.org/publish/RegCir/RG10-101.pdf ) which was vague but eliminated 99% and 100% payouts. See page 2, 3rd hyphenated line. "- The source of account funding and profit and loss split should be documented. A split which provides all or virtually all of the P & L to the trader is likely a red flag that the account is a customer account." If you don't think 99% is 'virtually all of the PNL to a trader, then you have no credibility. WTS US is a CBSX firm, and governed by this memo, although they apparently don't care if they, or their subs, LES and Capital Traders Group, allow 99% payouts.