Hello All I want to start a small Futures LLC with reduced rates, similar to a prop shop for futures traders trading remotely. Money would not be deposited with me, it would be held by the clearing firm, but having negotiated low rates with the firm, I would pass savings on to my traders. Something like 3.75 r/t, all in (excluding s/w) with no minimum volume, going to lower rates for high volumes. Even this base rate should be at least 1.50 r/t savings over retail brokers, with no difference in risk, software availability, or speed. CONSTRUCTIVE feedback would be appreciated. TIA.
Are you offering things like a traditional prop or are you basically just wanting to be an IB? I've never traded prop, but from what I understand there is training, meetings, etc.
Good question and to be honest I am not sure of the answer right nowbecause things are still in the planning stages, but as it looks to be something in between. There will be no meetings or communal office space, as the plan is to offer the pricing to remote traders. It is strictly to get people better pricing then they have right now. After all, that's one of the few variables a person can anticipate and control.
If the plan is truly get better pricing, you'll want to look in becoming an FCM. Your rates quoted above are not competitive for anyone that trades decent size in my opinion. As an IB you are going to have hard costs that are not negotiable and then you'll have your markup. You'll want to markup enough to cover your own costs and make this worth your time as well and it will be hard to compete with IB, Open ECry, etc. being an IB. Now, if there was something to be obtained by trading at your firm outside of ok rates, then it could be worth it. If I was new and needed something more than just good rates, then I would be interested. If you are just offering rates as an IB, then it's just about rates and rates only. In the beginning, you'll be hard pressed to be rates other FCM's and IB's are offering currently. In my opinion, you need more than ok rates to stimulate enough business to make this worth your time and effort. Of course, becoming an FCM is not exactly an easy proposition.