Does anyone know anything about the rumour that SLK is getting rid of its clearing of day trading shops? I heard they were only going to rent out the REDI+ front end. As a customer of one of these firms do you know if they will let real customers stay at SLK or should I move my account now?
I highly doubt SLK will stop servicing the trading community. SLK business is built on clearing. I'm sure a good portion of SLK's income comes from servicing short term equity traders. SLK may however increase capital requirements for firms or ask marginal firms to leave. It is possible SLK may let firms use REDI+ as an execution platform without clearing SLK, however I don't see this happening except for large institutional customers or hedge funds. Remember, NYSE Specialists are really daytraders and SLK clears a good portion of that business . If you are at a firm that clears SLK and you hear rumors that the firm may leave SLK, it may be for reasons that they cannot disclose to you . I have been a SLK(FOC) customer since 1984. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
Gene, Think about how much revenue your firm generates for Goldman on a yearly basis. Wouldn't they be ok if they lost it and isn't the association with day traders hurting Goldman's reputation? What hedge fund wants to be associated with day traders when they are out soliciting finvestors?
I heard the rumor from a friend who works in the clearing department of Bear Stearns. Obviously they are biased and have an incentive to spread such a rumor, but this is coming from a guy I have known for 21 years. He used to work for FOC (a division of SLK) many years ago too.
Newatthis, I haven't heard anything like this . The daytrading trading firms generate a substantial income for SLK and they provide "liquidity" to the trading markets. In terms of direct access ,software REDI+ is largest(by share volume).I doubt SLK would leave this business. It is possible that SLK and Goldman may increase requirements for trading firms. Gene Weissman Lieber & Weissman Sec., L.L.C. gweissman@stocktrade.net
Most hedge funds and large institutions don't want to be associated with us "day traders" One of Goldman's advantages is its capital and its reputation. The liquidity issue Gene brings up is a nonstarter. Day traders will continue to use the REDIbook if that is where the orders are. Goldman Suchs would rather rent the redi+ plus to any day trader who is willing to use the less reliable software they push than be known as being in the same business as Southwest or Penson.
We have just switched our entire back office over to SLK (directly vs. via First Options of Chicago), and I have spent a lot of time with the SLK people over the last couple of weeks, and I sincerely doubt if there is any plans on their part to change business plans. On the other hand, there are rumors that some of the smaller firms may be looking for other home, let me clarify "rumors" - this has nothing to do with a SLK dictate as far as I know.
You would know as well as anyone Don. Thanks. Good luck with the operation. Speaking of rumors, i always heard that you have a BIG heart. I assume that Bright will be at SLK for a long time then, right?