$ to start a prop firm

Discussion in 'Prop Firms' started by jasrlew, Jul 28, 2003.

  1. jasrlew


    I wonder how much it would cost to start a good prop firm with 4 offices and the ability to remote trade. Just curious.
  2. Umm... How about starting with one office? :)

    ~Scientist :cool:
  3. jasrlew


    Well, I put in four because if I did not, I knew someone was going to ask how many offices. He-he, but I never thought of the ramifications of suggesting 4. Thanks scientist
  4. i would guess 10 million liquid would be a good starting point.


  5. Starting a prop firm with 4 offices would be like learning to trade with 20 contracts per trade,bad business practise, period.
  6. jasrlew


    I should have added a disclaimer to my question, it was a question asked out of curiosity only.
  7. jem


    I did and had one for about 5 or 6 years.

    Your intial choice is franchise into an exiting one, (no longer put down by Don Bright, in the past he put down LLCs and franchised prop offices.)

    If you franchise and your firm doesn't lower it rates while your competitor does, you are in trouble.

    If you have a lot of volume and some cash (much less than 10 million) you can approach a clearing firm and try to get competitive rates. Not easy, volume helps.

    Then you have to pay a lawyer to help draft agrrements and become a member of an exchage, invest time and money into risk control and compliance (people and software).

    It can be done but with the cut throat nature of the pricing, you better have an edge before you start one.

    It is better to run your own show.

    By the way I know of one that might be for sale if you are really interested.
  8. jasrlew


    Thanks Jem, I'm not in the market for a prop firm, just curious.
  9. One thing I can add is the SEC is really getting strict about opening new BD`s. I know a guy who was denied. The reason for the denial was "there are to many existing broker dealers in the area". He loopholed it by opening branch office through us.
    That may be a better course of action for you. Let someone else(not self clearing) take on the risk while you take a vig off of traders you bring aboard. These usually being retail traders, pro`s are much to savy to overpay by enough to make it worthwhile.