exchange membership / deposit

Discussion in 'Prop Firms' started by OHLC, Aug 20, 2002.

  1. OHLC


    How does it come that some firms can actually propose deals requiring a deposit less important than the amount required by the exchange they become members of ??
    Do the traders there have to make an additional deposit directly with the exchange ?

    OHLC, still confused
  2. Exchange membership is required, which means an annual fee (around $500 or so), but no "deposit" is required that I've heard of. Whatever funding is supplied goes into the trading firm to the Clearing firm for traders funding. I'm curious as to what you're referring to...??

    Don (also confused)
  3. OHLC


    Thanks Don. In fact, I think I have found an explanation.
    Although the material from the exchanges is nowhere near clear, and the requirements are differents at each exchange, I gather two clues :

    -exchange membership may be available as individual membership or through a firm benefiting from an already existing corporate or partnership membership.
    In this case, the capital requirements apply to the firm.
    -capital requirements may be different for on floor and off floor traders.

    I verified this for the phlx, an off-floor option trader registered with this exhcange do not need to maintain the 25k$ with a phlx approved clearing firm.

    Confusing and shady business...

  4. OHLC


    Bottom line is it seems to be MUCH more simple to get the membership through a firm and let them do the paperwork. And also let them do the registrations with the NASD or NYSE and SEC.

  5. Yeah, the primary membership requires buying (or leasing) a seat on the exchange and filing Broker Dealer paperwork. Members of the Firm are "associates" for this purpose. Capital requirements are with the Clearing Firms.