Individual exchange members in Chicago : what structure?

Discussion in 'Professional Trading' started by TraDaToR, May 7, 2013.

  1. TraDaToR



    I would like to know how ( and if )individual members of CBOT and CME are incorporated. I am not interested in corporate memberships.

    Do locals simply trade in their own name( and just fill income tax at the end of the year )? sole proprietorship? Can you create an LLC or a structure and trade with your individual membership?

    Thanks a lot for your help. Apparently I must create a structure to immigrate in the US but I don't want a corporate membership...Problem.:(
  2. garachen


    They really just want to make sure that the benefits of the seat are flowing to just a single individual. They are not such sticklers on tax/liability structures.

    So, it's pretty common if you set up a single member LLC, or a two member LLC (with two seats) that the discounts will flow through as individuals. You just have to talk to them (or better, go through your clearing firm's membership department).
  3. TraDaToR


    Thanks a lot Garachen, you are really helpful. Yes, there will be only one trader, me.

    So if I understand it right, I can buy an individual membership then set up a single member LLC for immigration purpose to finally trade in the name of the LLC with individual member rebates. ??? I will talk to my clearing firm about it.
  4. garachen


    Yes. What you are asking for is not uncommon. They are pretty flexible as long as the intention of individual member is followed. No commission sharing.
  5. TraDaToR


    Great. The account must also be an individual one, right?
  6. Other than reduced clearing fees, are there any advantages to being a member in an exchange such as cme and ice? Iow, are there any structural edges a member has order execution wise vs. A public customer firing off orders on IB? Thanks.
  7. garachen


    No. For them 'corporate' means lots of people. 'Individual' means one person. It's not tied to the entity that owns the account. It's tied to how many people are getting benefits. So you buy the seat in your name then pledge it to your company then both your personal and corp accounts will get discounts. Because its all really you.

    As I said before. This is all very common. They are used to traders doing things for tax reasons. Here's an example of something I did.

    I bought a single FULL Cbot membership under which I personally trade lots of ags. In addition I have pledged the AM portion of that membership to my company where other people trade treasury futures. Then I bought 1/2 the CME shares I needed and am 'renting' the other 1/2 of shares.
  8. TraDaToR


    Ah OK. It can be both. Capiche. Thanks a lot.

    MushinSeeker, no you don't get special edges in execution being a member( except if you trade on the floor of course ). If you place a limit order at one price and then a member place a limit order at the same price, you will still be filled first with IB. But there are some high volume/ low average trade strategies where you simply need the membership to be profitable.
  9. garachen


    Too much to answer in a post. PM me. Ill give you my number to call. Much easier.
  10. Blotto, as someone in a very similar position I would be grateful if you could let the other readers of this thread know what you learn from your telephone conservation with garachen as I think it would benefit a few of us greatly. I'd ask for some personal advice myself but obviously garachen isn't in the business of running a telephone helpline and I do not wish to impose on them.

    Many thanks.
    #10     May 8, 2013