Starting a new firm

Discussion in 'Professional Trading' started by Theory, Jan 12, 2004.

  1. Theory


    I know that this is very broad and I'm in fact maybe even looking for a sort of mentor in this. I had been trading for the past two years but have some seperate ideas and philosophies from my former company. I was wondering about starting a new group since I wouldn't be able to start my own clearing house. I know this is broad: Would anyone have any ideas on how to go about that? Is there a specific clearing house I should go through? Is there any specific technology I should use? What would be a good rate of pay to clear my trades and to rent the trading platform? Is it in fact possible to clear my own trades? (I'm guessing probably not) One of the things I'm thinking is that if I do clear thru a clearing house then I lose the commisions of the group. Either that or if I have to pay .01 cents to the clearing house then I have to charge .015 in order to make a profit and I don't want to screw any traders over. I know I'm asking alot but I didn't learned much about the inner workings of my old company. Any help would be appreciated.Thanks.
  2. Transact Futures

    Transact Futures Transact Futures

    Are you looking to trade equities or futures?
  3. Theory


  4. Transact Futures

    Transact Futures Transact Futures

    how about futures?

  5. Th biggest issue tends to be the deposit...most clearing firms require addition, many are no longer taking upstarts anymore....the best thing to do is align yourself wiht a reputable group that will allow you to grow and have the option of going out on your own ...hard to find but there are some out there...for order execution and clearing figure 1.0 per share to start.....the reason its so high is that you probably will not have the connectivity and lines available so you will have to piggy back addition some ECN's require higher net cap to hook up to them so you will have to piggy back their too....good luck though.
  6. Very simple. Buy an exchange membership. Qualify with a decent clearing firm. Negotiate for rates. Pay all the exchange fees, telecom, etc. Begin trading, and hope that you don't end up paying double what you could at other established firms. Economies of scale don't usually kick in until about 10Million to 20 million shares per day of listed equity trading.

    This is the same model as used by trading firms on most exchanges.

    One of the biggest hurdles is the relationship with the clearing firm. The better firms want you to personally guarantee all the traders with your money....since they don't want to have to assume the risk management for a bunch of new traders that they aren't familiar with.

    Start with one of the lesser known firms that may allow you to act as an introducing broker (pretty tough to get traders to join you, but this will save you a lot of "up front" costs and capital requirements).

    After a couple of other firms were incubated within our firm, we chose to allow those who were entrepreneurial in spirit to start backing other traders and basically start a business within ours.

    All the best...