par for the coruse?

Discussion in 'Retail Brokers' started by fallingcold, Apr 16, 2007.

  1. I'm about to open a futures account. In reading the fine print of one broker I see 3 things I don't like. I'm wondering if this is normal or something I should be cautious about.

    1) they list no fees in the fine print or on their web site and when I ask they quote me commissions but say nothing about transfer fees or anything like that

    2) they say in the fine print that they can change the fees at any time without notice

    3) they are not members of sipc

    Is this just par for the course or should I be concerned?

  2. anyone? I can't be the only one who reads the fine print :confused:
  3. SarahG


    You said pay for the course in your subject line. Did you buy a course? Or are you opening up a futures broker account? These are two differenet things you are asking.
  4. SarahG


    Make sure he is an attorney that specializes in SEC law. But I don't think it is necessary to hire an attorney as long as the company is a reputable popular company. You can call the CFTC or NFA and ask them if the brokerage has had any complaints. They have an 800 number.
  5. I was looking at PFG as I'd heard their customer service is good and the commissions they were quoting me were good too. I'm new to futures trading so I liked the thought of good customer service.

    I see they have been two actions against them by NFA and one by CFTC and have 25 CFTC reparations cases. All 3 have fines associated with them. Doesn't sound good does it?

    In contrast, IB appears to have 1 NFA action against them, none with CFTC and 3 CFTC reparations cases, and I believe they are a much higher volume brokerage.

    I think I'm answering my own question. IB is a member of SIPC and PFG is not. IB discloses their fees but I have to ask about each specific fee with PFG and can't get a list of them. I would have to sign an agreement that includes a statement that they can change the fees at any time without notice. While I doubt it's likely, I've agreed they can suddenly charge me a $1,000 commission if they feel like it. Or $1,000 to get my funds away from them. Or whatever they feel like doing.

    Good customer service is important to me, but it doesn't outweight my concerns about the fees. Guess I'll go with IB :)
  6. GTC


    fallingcold, the fee is subject to change with almost any brokerage firms; but good brokerage firms usually tell you in advance if the fee has to increase.
  7. 1 & 2) Fees are subject to change at any time. In particular, it's the exchange fees that change, and depending on your "deal" these get passed through to you or are included. As for your commissions, get them in writing (email is fine) and make sure it specifies per-side or round-trip and whether or not it is all-in (all included) or plus exchange fees.

    As for other fees, just ask if they aren't listed on the web-site. Transfers (for futures accounts anyway) are usually free.

    3) Futures accounts are not SIPC insured, nor insured by any other agency. However the CFTC has specific accounting regulations. But it is possible for the FCM/brokerage/your account to become insolvent without recourse. The only thing you can do is diversify among different FCMs. Staying with larger firms doesn't mean much, ala refco.

  8. Regarding NFA and CFTC cases, you should also consider when the cases were brought, and the length of time the brokerage has been in business. You can also see the case particulars many times.

    As for IB, they offer SIPC because they use what they term as a "universal" account. Each night money is swept into a stock account which is SIPC insured. Has no bearing on open futures positions. There are other brokerages that offer these "universal" accounts, allowing stocks, options, futures, and other instruments to be traded in a single account. I prefer specialized accounts.

    Good luck
  9. cold - I would interview at least 3 brokerages before making a decision. If that NFA stuff doesn't sit well with you, find a firm with a better record. You ultimately need to be comfortable in your decision as this is your money at risk. Trading is hard enough w/o worrying about who you are dealing with.
  10. If the fees arn't clearly listed, and they have a bullshit clause that they can change fees anytime (w/o notice), then forget it, why fuck around w/ a firm that could scam you when there's plenty of reliable ones out there.
    #10     Apr 18, 2007