how are they different from one of the trading firms already doing this? aside from having infrastructure only. what split do they offer? what risk do they tolerate? are they exchange members (transaction costs)?
nitro, for some one like you, with a fair bit of experience in the industry alrdy, I don't know what you would gain from an incubator like this. You are in Chicago alrdy, so why not just plunk down a few 00k to buy a Merc (or CBOT) seat, and get a FCM to sponsor your link, write your own software and go at it? I mean, you probably have enough knowledge that those steps are trivial. It is not rocket science either way. Let's say capital is a concern, go to any exchange member, show them your software, and ask them to back you for a 50/50 cut, simple, it is no diff than an existing floor member backing a new member back when there was a floor. Outside of technology and capital, it is just a function of time and bash your head against it until something breaks. Back to that little startup. TXC or something like that. Wall Street is a small enough place that I have dealt with some of the individuals there. But if you look closely, *none* of them are or were fund managers or traders, Alan is a lawyer, two technologists (and the CTO was never in HFT, he was a head of fixed income tech for a mutual fund), and a couple of former PB salesmen. Now, let me ask you a question, what do they have that you need? Technology? They won't know a HFT system if it hit them in the face. Capital? Ok, maybe, but they are a newly funded startup too, and backed by *one* funding source (look at the press release carefully), how much capital could they have access to? And let's be frank, there is a huge chasm on wall street between "producers" (traders, PMs, or sales ppl) and "support janitors" (everybody else). So what do they provide? A bunch of ppl with nice senior janitor resumes? If you are going to go thru the steps, drop me a line and I will give you some ideas.
When the support companies spot a new opportunity to jump on they always go for it in a big way. There's going to be a big rush off inexperienced participants in the HFT space bought in and supported by companies that don't have much experience of what is needed. The support companies will make money selling spades as they always do.
you can get backed by the trading firms in chicago that already have the lines, seats, connectivity, but the days of 50/50 splits are gone.
Hmm, this i am curious about. Let me ask some of the members i know, it is possible I am out of the loop here. Of cos, I am not talking about some guy off the street, I am talking about at least have some connection with the member(s).
which one? every firm is an incubator. seeing more of these types of firms pop up and it's a little scary - like the days of charging $10/1000 at a prop desk. really makes me glad I didn't get suckered into one of them.