can you give an example of the cost structure your company has and what the percentage is that a trader gets?
I would prefer not to say our cost structure, but I can tell you that a penny per share is way too much. We split net profits 50/50 with the traders. Exceptional traders get a higher payout. Many "quasi" prop traders fail to realize many of the groups/firms are really out for the commissions and not interested in the traders net profitability (the firm wins not the trader).
How long do you think it will take before Swift's prop model becomes extinct. Penson Canada is doing them a favour by giving them flat fee commission, per stock symbol (example, $10 commission for trading as many shares of QQQs are they want). The reason for this favour is because they use to give Penson Canada some good retail business, not the case anymore. Also, Swift Trade is now competing against people that Prop trade with commissions. Wait a few months until some of the big US brokers and day trading firms start getting the same flat fee clearing deal as they have. Some have already started, especially the ones that are self-clearing. I really wonder if their traders can make money when they no longer are getting a substantially better ISLD rebate and no longer have a special clearing deal. Most of ST's traders make money only because they are able to take a one penny gross profit and also get a rebate. One penny will be much harder to get with increased competition and equalized rebates.
This Island rebate scam tells me I am golly glad I don't have any money placed with that broker. It doesn't even seem to have dawned on them that integrity is desirable, hence they have no remorse. Daytrading has taken lots of knocks for attracting creeps, and as ST proves, unfortunately much of it is deserved.
The NASD, SEC, OSC and IDA will be watching Swift Trade like crazy now. I don't think they will keep too many retail clients after this, can't see why anybody would want to keep money at a firm doing these kinds of things.
The special island passthrough rates werte only effective for one month. They are back to normal, and traders are doing as well as ever. ST doesnt want retail clients anymore, BTW, but will serve their existing ones. "Those type of things"that ST is doing....I cannot go into this at all, but I have a lot of confidential info around certain happenings, and all I can say is that I assure you they are definitely not doing anything bad as you may put it.....and a lot of this has to do with NASD not ST, of you catch my drift.
Anyway, this will not a big loss for retail client because their fee wasn't very competitive (about 25$/trade (1000 shares) the same level than the canadian bank). The most interesting detail is that we can read SilverBullet claim that 1¢/share is not a good structure for fee, but for retail client it seem this is right, because ST had 15$+1¢/share, given about 25U$, not very logic unless that retail client don't have any consideration from them.
I heard that Swift was suppose to pay their Prop trading manager a huge amount of money but instead they fired him because he wouldn't re-negotiate the term of his contract. I don't know any traders that would want to have a long-term relationship with people like this.
Addressing the 1 cent per share thing......You guys out there that trade their own accounts trade differently than the style many prop traders do. The Math lesson I gave refers to very high volume extremenly short term trading (i.e. 500k to 3 million shares a day via 200-600 trades). I am not arguing anything concerning client accounts. The math thing I did was to demonstrate that with 1 cent commissions such a style does not make sense. I am not sure how much you people pay per month/year in commissions that trade their own accounts, but I am pretty sure you dont trade thway....otherwise you woulud need to gross massive amounts per day.. ST is supporting existing clients, but it is not an area in which they wish to be, and it is probably a smart idea based on the way things dried up after decimalization.
Silver is correct on the pay scheme, and many of you guys are comparing client vs prop, and scalp vs swing trading. You are comparing apples to oranges. The problem is that there are not many pure prop trading firms left, except the big brokers. And not all Swift traders are purely scalp. The better ones have their own methods, but the company imposes tough stops on accounts to prevent any big losses. So the downside is no million dollar positions, but the firm won;t go under due to several rogue traders either. As for the common question as to why split profits?? "There is no financial reason why a profitable prop trader would remain with Swift. A 30% payout simply does not compare to an opportunity to trade for yourself. " Yes there is a reason (2 actually) a) young guys lacking 30k (which is like 60k Canadian). If you finished school with tons of loans, and are eager to trade, that doesn't make you a bad trader, but you have no way of proving yourself due to these high standards and b) the no-commission structure is, for some traders, better suited to their trading style. Now i am making general comments on prop trading. 30% payout for a new trader is fine, but increasing that payout for more profitable and less volatile traders should be made. cheers Canuck