Because of the overheads involved, that's why not. You can get the same office space much more cheaply elsewhere. Heck, if you're worried about people not wishing to commute for 100s of miles just go to Stockley Park or somewhere sarf of the river, or Ilford. Anywhere is cheaper than the City. Since the cost of the space, like all other overheads, will be shared among the participants it makes sense to go for something cheaper. Making a sunk cost argument to hold on to expensive space under lease is a fallacy anyway. Sublet it to someone else, then take cheaper premises. Easy. So, to sum up: A clearer finds itself with too much office space. Rents it out to captive arcade at high rates, thereby ensuring that that non-profit company doesn't make a profit, but the clearer does. Strikes exclusive flat-rate deal with said arcade to do its clearing (i.e. not passing on exchange discounts and incentives), thereby ensuring that the clearer makes a nice profit again. Nothing wrong with making a profit, but this won't wash. If your major selling point is low cost and overheads you don't start by incurring high overheads and you don't forgo discounts and incentives.
I am actually going to look at it today. Will revert with impression. Apparently it is not open until first week July. I agree on the Geographical fixed cost argument but think it is aimed at beating the deals that are already offered around the city, where after all the major population of locals already sit. If you put it in a suburb then it will cut out people commuting from the other side of Town. This business will of course increase the clearers profit, by cutting out the "middle man" arcade business, they will take the majority of that profit onto their books and at the same time get paid an incremental fee for office space which otherwise they would be getting nothing for. The disadvantage of going anywhere else is that you would have to take on an additional lease and hence fixed cost, the current space I suspect, is already paid for.
Morning. First post here - although i've been "lurking" for a while. Aren't Fortis opening a new floor on Bishopsgate? Seems a bit of a coincidence.... But hey, if it means cheaper rates, who's complaining?
Yeah, I can just imagine some 500 lot trader selling his Mayfair penthouse and dying to experience the kicking nightlife of downtown Peterborough. Or maybe he thinks that exchanging his 10 minute tube journey for a 2 hour commute to a soulless Business Park in the provinces is easily worth a cost saving of 1c per side? I mean why stop there? I hear you can get some great deals in Ulaan Bator nowadays.
Mr Mayfair Penthouse wouldn't be the target audience for this sort of thing. People who are concerned about their costs are. Tradersalliance's big selling point is low costs, but they contradict that with their actions. IMHO. YMMV.
disagree 100% lower costs isnt the panacea. life isnt all about cutting costs until life becomes no fun. they are saying you can still trade in the city (with the convenience & life style that goes with it) at much lower costs. by lower cost, this actually means more money in the traders pocket rather than to the gaffer. simple equation: trade in good location + low costs = happy trader trade in dull location with marginally lower costs = dull trader good bye chelsea, hello reading. i dont think so some how.
-------------------------------------------------------------------------------- Quote from qazwsxedc: Mr Mayfair Penthouse wouldn't be the target audience for this sort of thing. People who are concerned about their costs are. Tradersalliance's big selling point is low costs, but they contradict that with their actions. IMHO. YMMV. -------------------------------------------------------------------------------- This business, like any, is fundamentally about reducing costs. This becomes more so when you start trading bigger size. Costs can be the deciding factor between a trader showing a +/- PnL. don't think Mr Mayfair Penthouse got to live where he does by being indifferent about his costs. I'm also guessing that this place will have a bias to taking on the bigger volume traders so that their cumulative volume will get them a better deal with the clearing firm.
- Probably related, but i've heard that Refco Pro is far cheaper than TT anyway. Apparently Mac's commissions are now the cheapest available - anyone know this for sure? TWalker - did you get over to the "trading alliance" office today, or were you sidetracked by the heady mix of birds and sun we're currently enjoying?