does anyone have experience in starting a prop. firm ?? i imagine the relationship with a "prime" broker or network would be the key ingredient. what is the logical first step ?? thanks ! surfer
Are you looking to start a BD or just a sub group (prop shop) under an existing firm. To start a BD isn't worth it rate wars have brought down rates so low that fixed costs will kill you.
Dave- I'm sure people more experienced than me will provide some better info..but this is something I was thinking about too. You may want to start by contacting some clearing firms (like PaxClearing)...also, GreenTrader Tax website has some info on it. Seems like there is some growth in the IB(introducing broker) business too (in futures and in Forex). There are some risks in this business..and from what I hear a lot of it is regulatory. Good Luck and as always, Happy Trading. uptik2000
When I checked on this several months ago with a clearing firm, they said 1.25 million on deposit with them to do that type of agreement. You may want to go direct to the clearing firm to reduce the number of "middlemen", if you can swing the capital req. As far as the other fixed costs, you have some say. I never did understand those firms that get an office in midtown manhattan (or other expensive digs), when you can trade just as well from a cheaper rent office in NJ or surrounding area - wasteful IMO. To "impress" the newbies? Impress them with your P&Ls instead