Mav74 You have discussed this rumor several times in the past 2 years . all for good reason What is different now then before with a actual rule being implemented by the sec ?
My understanding is that most CBSX firms are not set up as JBOs....is it different for those firms? How can the SEC regulate giving a trader a "bonus" at the end of the year? This is too easy to get around and too difficult to enforce. I don't see it happening.
firms can simply hire traders as employees. otherwise, prop firms will move to portfolio margin if payout limits are enforced and still pay out 100%. many more "prop" groups and individual traders have left jbo over the years to CPM. jbo is outdated, 1 year lockup, regulated, compliance, etc.. if your prop firm is big, owner most likely has up millions of his own capital which qualifies for unlimited intraday leveraging via CPM. JBO is for the little MM guy or group capitalized < few million.
There are a lot of changes going on, that's for sure. We are planning ahead, positioning ouselves in such ways to be able to offer our traders the "best of the possible alternatives." Staying a family owned business gives us this flexibility... a "board meeting" comprises my brother and I, my niece, my other niece (CFO type) and a 5 minute conversation usually. And, Love them or Hate them, we have very good relationship with Goldman, who offer us the aforementioned flexibility. I'll try to post as much as I can as things develop. All the best to everyone for 2012! Don
Don, there is a very real possibility of the prop model going to 100% employee based very soon. This means W-2. You should plan accordingly.
Yep, that's an option alright. As we query our current top traders, they're fighting adamanty against this. They like their independence, freedom, and tax benefits currently enjoyed. Don Good to chat with you my friend! Sitting home on a Saturday morning. I have had to actually re-train myself on my trading, LOL. all winning days this year, albeit small $$ (kinda busy catching up with stuff). First week good movement, last week seemed like everyone went on vacation. All the best, Mav....
Don, they should not be fighting anything. You will have two choices. Hire them as W-2. Or back them 100%. If they are a "top" trader, you and your brother should be tripping over each other to back them and the amount of money they make will be the same. Nothing really changes for your "top" traders. The ones on the bottom and in the middle should be much more concerned.
I may have to invite you to chat with a group sometime to explain your points. They like being exempt from FICA (15%), they like being taxed on triple net, and they like the fact that they don't "work" for anyone. Trust me, I know what you're saying, but the whole idea of losing the "floor trading business model" is being fought tooth and nail. The minimal amount of initial funding is generally a moot point, especially after a few months of good trading. edit: after one or two withdrawals, they have no initial capital up anyway. Don