How to access institutional markets?

Discussion in 'Trading' started by lescor, Nov 23, 2003.

  1. lescor


    I'm very interested in pursuing some trading strategies that require access to the corporate debt markets. Since these are not exchange listed securities, how could I gain access to them?

    All I've looked at so far is bloomberg, since I'd probably want a terminal for analysis. But from viewing their site, it looks like they also act as a broker and provide a centralized marketplace and execution platform for various securities (bloomberg Tradebook). Does this mean that you can establish an account with them that would include clearing and leverage?

    Of course this service is only available to "professional/qualified/institutional investors ... and is not available to private customers. " Can you qualify as a professional investor with a minimum amount of capital, or by forming an LLC?

    Can anyone who trades, or is familiar with, these markets, or who's looked into this before, point me in the right direction? Basically I want to be able to trade as a hedge fund without the cost of setting up one and being regulated as one. I'd prefer to trade on my own, but might consider a small partnership with a few people.

  2. Bloomberg is not a clearer or a broker. Their platform provides a marketplace for many brokers, investors, traders, banks ... to come together and show their bids/asks. You may execute an order through bloomberg but it will be with another broker.
    At the end of the day, bloomberg is just a communication platform.
    Start getting on the phone, and get a clearer so they know where to send your orders, but i'll tell you right away, if you don't have at least $5,000,000 to trade, forget about it.

  3. 5 mill ??? lol, swoop ! 5 mill in this market would be like trading the ES with 500.00 margin and 600.00 in your account.

  4. Pabst



    I don't think Lescor is the kind of shooter who needs to use Goldman. There are plenty of second tier firms that would gladly facilitate trades on margin (repo's). Lescor is probably talking about less than a million dollars worth of securities. I had an account at a small firm here in Chicago when Bloomberg first started that corporate quote page, I think Diawa was the market maker, firms would just piggyback the screen and charge a couple of 32nd's to do the trade. Keep in mind that is a great business. Two ticks on $500,000 worth of bonds is a free $312.50 cents. Maybe on Wall Street that's chump change but to a more humble regional brokerage that's as good as it gets.
  5. Pabst


    WTF! Now that you're hanging with Victor, you think every position has to be leveraged in the millions!:D
  6. Market, Pabs,
    What I am saying is this: the OTC market is a rather different animal than the exchange market. If he wants to trade OTC products, READ Corporate bonds and do such things as Repos, EFP's, while one could be leveraged to the hills, you just cannot do it with $50,000 as cash colleteral.
    At least it wouldn't come to my mind to even try to, just because you're gonna get raped without any ammo.
  7. lescor


    I'm looking to do strictly arbitrage- convertibles, risk arb and spreads between various corporate issues. I'm already doing this with exchange traded debt using $1-2 million of capital in a prop account. This works because I get huge leverage at great rates.

    I admit to being green about bid/ask spreads, liquidity, interest charges and commissions for stuff that's strictly the domain of institutions. But I was hoping that if I could put up $100,000-200,000 I could build a diversified book and shoot for a reasonably low risk 25% return, but with enough leverage to make it worth it (a few million worth of positions).

    I have no idea where to look to set up such an account, or how I would have to be structured to do so. Right now I'm just a guy trading with a prop shop from home, but I've always thought of myself as a one-man hedge fund and trade that way. I just want to step up to the next level. Any tips would be much appreciated.
  8. lescor


    Any comments on whether it's feasible or possible for an individual to trade in the corporate debt markets?

    Has anyone on this board done the kinds of trading I'm talking about and can comment on commissions, liquidity, access, etc?