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Not so Swift Trade

  1. These guys are getting squeezed in a major way. I wouldn't be surprised if they go under. Their offices are empty. I walked into one last year and there were four traders and around 36 empty stations. I repeat...last year! I don't want to imagine what the numbers may be this year.

    They started a hedge fund to provide an alternative revenue stream but I don't know how palatable it would be for sophisticated Canadian investors to give their money to traders who make a chiauaua look serene. The hedge fund is still mired in regulatory filings (or so they say).

    Since ST pushes over-trading, I think with the arrival of IB into Canada they will probably lose traders who believe a drastic commission cut would offset other benefits they derive from ST.

    But still what they are alleged to have done is simply stupid. Not only is the NASD not too happy with them and will probably ask that they disgorge all ill-gotten gains but I somehow don't think Island will have warm & fuzzy feelings for them either. All this for $19k a month? Wow! They must really be desperate.
     
  2. They have some decent traders, but they will fly

    More business for IB Canada.
     
  3. But hey, they still offer a nice 20% payout of your profits if you trade proprietary!!
     
  4. Babak....just to clear things up here...

    ST has resorted to a new business model in the past 6 months...in addition to the hedge fund, they have hired and trained hundreds of prop. traders since theit client based has dwindled susbstantially. Their offices are jammed now with prop traders.

    By the way, what's IB? When does it come to Canada.

    Secondly, the payout is 30% of gross for prop traders, not 20.....their website is not updated.

    Finally, Island is saying that ST didnt do anything wrong, and they even paid ST the 19k.

    Their top traders last month grossed over 100k, and took home 30k US for one month.....BTW that was the ROtterdam, Holland branch.
     
  5. One more thing, prop traders pay zero commissions (just ECN pass throughs), and put up zero capital, and gave buying power up to 300k each.
     
  6. "By the way, what's IB? When does it come to Canada."
    Do a search for "IB" in this forum. You are guaranteed to get at least 10 hits. heehee
     
  7. Silver

    Interactive Brokers is in Canada now. You pay a one cent commission and keep 100%. On trades over 500 shares, you pay 1/2 cent commission.

    For all the guys making 30K per month, jumping to their own account should be a snap.

    I got a few doubts that Island is pleased about being finessed out of 19K.
     
  8. I think NASD will come down very hard on ST. Now is not the time to be cute and fight them. They have to prove that they are tough and may even go farther than what is called for just to prove it to the media and investors.

    Based on the info available, I have no doubt that ST did indeed break NASD regulations. But new info may come to light. Lets wait and see.

    btw, SilberBullet, how do you know more than that which has been made public? do you have a relationship with ST? do you work for them?
     

  9. Wont be long before these folks are gone to Bright Trading. Why not put up 25k and keep 100%?
     
  10. if you have one trade with 100,000 shares and get 0.8 of a cent how much will you get net at don bright?
     
  11. Many of their traders are not interested in moving to the US to join another prop firm. THere are numerous prop firms in the US from which they may decide to investigate.

    It is very unrealistic to believe that ST will be shut down.....if anything the hedge fund may be, since this is the division of the firm that did these wash trades (Another thing the press articles are unclear about). The Prop. division is very unlikely to be affected by any of this.

    You know it must be a slow day for news when on CNBC (where I first saw it) reports that Swift Trade illegaly made 19 grand.....breaking news.....Nick Leeson took a 24 minute crap today and reports say it was rather stinky......

    The media talks about stupid stuff ALL the time
     
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  13. silverbullet: do you work at swifttrade as a prop trader?
     
  14. I spent a week in Swift Trades Toronto office in March, the place seemed like a morgue. They have 2 entire floors, one of which had NO ONE trading, no one at all. The traders I talked to were sick and tired of no competition and high commissions. Also, I can tell you from my personal experience, their computers, ISP, etc. are a joke. The T1 connections broke down at least 3 or 4 times a day, everyday I was there. Amazing.
     
  15. I have also heard about ST's execution system problems....crashes, etc. THis must be a huge pain in the ass.
    BUt their prop traders dont pay commissions, so you must be referring to the few remaining client traders.

    I actually was there myself last winter (Toronto office) briefly and, yes it was quite empty. A friend of mine is in prop training there currently, and another just finished training. They were/are in training classes of 10+ traders, respectively....so it seems they are taking in big classes of prop traders
     
  16. What style do they trade?

    Where can I get more news besides the NASDR web site?
     
  17. SilverBullet,

    I'm a bit surprised that you are/were a prop trader at Swift and don't know about IB, don't know about Bright's presence in Canada, and don't know about something called remote trading (Bright and Echo among many). Are all prop traders at Swift so ill informed? If so, that would explain a lot.

    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. The ECN passthrough fees that they are currently paying would be very similar to IB or Bright or Echo's all inclusive 1 cent/share commissions. And less when you factor in the rebate given to provide liquidity.

    So I guess they must love the Swift Trade crash prone system, low quality ISP and high commissions/low payout. Yeah, must be that.
     
  18. Alright Babak,. lets clear some things up here....

    Yeah you're right, Ive never heard of something called 'remote trading' .......... considering I did it for some time.

    No I didnt know about Bright, but then again, they are not in toronto and have only 1 Cdn branch.

    The 1 cent commissions/share commissions would just not work out well to the style many of ST traders....lets have a math lesson....

    ST Trader trading (per day)
    600,000 shares (low) = $6,000 at one cent/share
    1,000,000 shares (average) = $10,000 at one cent/share
    2,000,000 + shares (high) = $20,000+ at one cent/share

    Now let me give you an idea of passthroughs at ST....
    Normally, traders that trade for gross pay about 10-20% of their gross in passthrough fees.

    ST Trader grossing (per day at 15%)
    $1,500 (low) pays $225 netting $1,275
    $3,000 (average) pays $550 netting $2,450
    $4,500 (high) pays $675 netting $3,825

    This high figure is conservative as grosses reach over 7 or 8 k rather often for some traders. Many traders will also earn a couple grand gross per day, and have a grand or two in negative passthroughs (liquidity credits) to reach similar (or higher) net numbers.

    30% of the numbers just above is:
    low $382.50
    average $735
    high $1,147.50

    Now, in order to net this highest amount with a one cent commission based on ST volumes (which also allows for sometimes massive negative passthroughs) the trader must gross $13,825 (at 1 million shares), or even more - $23,825 (at 2 million shares) since a high gross number at ST usually requires this sort of volume.

    So now you can see why the one cent a share thing is just unbelievable to ST traders, SO expensive. ST traders get very pissed when they accidentally hit ATTN and pay retail since it costs $9/1000 shares for ST. This is less than one cent a share, and it seems astronomically expensive.

    To gross $20,000+ at any firm day trading would require a phenomenal amount of buying power and capital tied up. Aimagine losing 10k in a day. Ouch.
     
  19. I agree with silverbullet a penny per share is a bit too high, especially with that type of volume. My group doesn't charge commissions, we absorb the costs so our traders can net more. We don't want to churn them, we feel they should be able to earn a living.

    I don't know much about ST, but I would love to learn more about their prop model if it can help make my traders more profitable.
     
  20. can you give an example of the cost structure your company has and what the percentage is that a trader gets?
     
  21. 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).
     
  22. 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.
     
  23. 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.
     
  24. 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.
     
  25. 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.
     
  26. 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.
     
  27. 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.
     
  28. 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.
     
  29. 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
     
  30. Bigscalper....After seeing ur post about that prop manager I just had to chime in.....The reason they are able to have these very low commissions is because they have developed their own Level 2 software and I can tell u it sucks.....The software has repeatedly gone down during fast market and could not handle the volume surges....

    but the best one I heard was a trader who was told that they could execute through MKXT on the software and after executing through the software it seemed like no orders were going out so they were told not to use it until further notice....However several traders had positions pop up on their blotter 2 1/2 to 3 hours later with positions.....lucky that most of the traders made money but i know of one that lost between $1500 and $2000 on that event.

    Heres the kicker....they made him eat the error...how bout that....can u say NOT SO SWIFT TRADE.....thier management are a bunch of selfish Aholes and I hope their firm goes down....lol:eek:
     
  31. Oh yeah...i forgot to mention that a few guys introduced them to prop trading cause it was very big in the U.S. but scarce in Canada....Anyway these 2 guys were making the firm good money and were promised cars on lease....well one of them ordered a car and then was told he should cancel the order.....Swift trade management is really classy....LOL:D