My friend has a large pool of traders and last thing he said month and a half ago none of them could trade for like a month already..
has to do with the sec breathing down everyones' necks about subs. gets expensive to have to deal with those guys in your office everyday for months. hold i've heard is babysitting them too, but gen ended up throwing in the towel... obviously wasn't worth the headache.
I wonder who will be next, seems like domino effect has to happen. BTW my buddy says there no comm. coming out of them , none of them are talking to anyone.. if you know anything post here!
Here is the real possibility. All deposit props that take less than $25k are basically finished. Just a matter of time. Why ? For example: Ameritrade buys a direct access technology and shelves it. Schwab buys a direct access technology and shelves it. These mom and pop fraud based firms want the <$25k deposit firms out of business. They gouge the mom and pops and lie about what they really make or put it in very small print that nobody reads or can understand. Make no mistake, the SEC is working with the fraud based mom and pop firms to make sure that the <$25k deposit firms bite the dust. In the meanwhile, the SEC allows $Trillions in $fraud by the big banks. ..................... The business model that will become extinct will be the model that: Requires deposits < $25k Sells software Sells education, seminars Makes revenue on add on cents per share .................... The props that will be left are those that: Rely on the profits of prop traders Require no deposits Do not soft dollar supposed education costs, seminars Do not make $ on commissions This is/has been happening as we speak. .......................... The next phase ? If one wants in the door of the props that are left, one must have the proof of performance. (particularly for remotes)
Interesting points. However, I'm not sure if the <25k props are simply going to be simply eliminated anytime soon. There are some proposed changes in the works for these type of firms, such as improving the distinction between master/sub-accounts and a new exam requirement for props that are registered with CBSX. Props that take in <25k which are registered with the exchanges should survive, as long as they are well capitalized and can generate enough revenues from their own strategies and from profitable traders. If a trader puts up say 5k capital contribution to get buying power, that amount of capital is what is subject to risk, since drawdowns are the trader's responsibility, and not of the firm. The firm takes no loss unless they are unable to manage their in-house risk parameters wisely. And if the firm is legally allowed to mark up commissions and negotiate a profit split, then why would this model be extinct?
for people who daytrade small cap stock you don't need $25,000.. postion is like less than $5000..and average lot size is like $2000. $25,000 is overcaptialized to trade penny stocks. so the $25,000 pattern daytrading rule is rediculous.
Hey brokenmarkets, not sure about your comment. You daytrade small-caps with <25k and you're now limited to purchases which aggregate to your cash amount. If you execute 2k shr trades with $10k in the account, your daytrading is limited to @ 5 buy trades/day. Also, you still have pattern day trading rules to contend with.