Hi, If I end up going CPO/CTA... should I care at all about the FCM that I clear with? How important is that? I'm just considering a few options here. Some are the giants FCMs (ADM, RCG, Man)... some are in the middle but have a reputation of promoting their CTAs (Vision)... some are much smaller but perhaps better from an execution/service point of view (Advantage). I'm already struggling to choose who I want to work with, even without thinking about the CTA issue. Just curious if this is another factor I should be considering. For what its worth, I don't think I'll need "a lot" of marketing help...
If you don't need marketing help then go with the cheapest IB/FCM. There are other ways of marketing your venture that goes beyond your broker. You should talk to your broker before you open an account and see if they offer these kinds of services before you begin trading with them because it's nice to have an investor base you can tap if you ever want to down the road. These types of services do not come cheaply though. FWIW, I have been clearing through RCG for many years in both a personal account and a managed account. I would strongly recommend them. Also, if you do enough volume look into the CME ECM program. It may save you a wad of cash. Good luck with your venture.
Thanks for the note. Very helpful. I hadn't heard of the ECM program before... I had been considering membership, but since my trading is evenly spread out between NYBOT/NYMEX/CME/CBOT, wasn't sure if that would make sense. My current FCM is RCG... and while most of their services have been adequate, I'm abandoning ship is because their risk department is completely incompetent. The situation is so bad that a competing FCM has explicitly asked me whether RCG is intentionally trying to force me out. (As far as I know, they're not.) My strategy is primarily short volatility. I can understand that they need to be careful with risk parameters, since many volatility sellers were blown out over the past year. But I think I'm doing all the right things from a risk management point of view. But they're still demanding margin = 200% of SPAN... and worse of all, they don't actually understand what SPAN is telling them. They are mixing up two different lines (ignoring the implication of net option value)... I can probably live with 200% of SPAN (margin to equity of 50% is already aggressive), but I can't when they don't understand SPAN's output. The other FCMs looked at my trading records, asked about my risk management... and ultimately are offering me 100%-125% of SPAN risk, calculated *correctly* (that's not asking for too much). So, if anyone else out there clears through RCG and has been put on some sort of restricted risk level with them, make sure you check your actual risk requirements with PC-SPAN. Very possible RCG is screwing you as well.
ECM is not available for commodity pools or CTA's. It is designed for proprietary trading groups that DO NOT accept any funds from outside clients. http://www.cmegroup.com/company/membership/files/ECMQA.pdf