Dude, are you even a trader? Have you ever talked to various firms about the deals they offer? All I'm saying is there are plenty of good, reliable firms out there that will charge you far less than half a cent per share if you do 5 million shares per month. I didn't intend this to be an argument of the viability of their business model.... - mnx
obviously there's a ton of ignorance on rates and people are getting raped. go read the new yorker mag on david glass from jasper trading as he was bragging he was making $3 mil a year profit in overides from 300 traders in his llc. llc's doing 50-100 mil a month vol pay well well under .001 a share and if a b/d they pay 1/2 that with many clearing co's. . so do the math. lets say they give out .003 avg on 150 mil a month vol and pay even .001 a share. thats an incredible 300k amonth of profit before expenses(150 mil x .002). so lets say there expenses are 40k amonth which is being generous. thats still a massive profit of 260k a month. the big llc's are making an utter killing and all they do is give you intraday buying power . they have little risk as they'll shut you down fast if you eat into your deposit. but to be fair its hard to get and keep people. the guy doing 3-5 mil vol is a fool to pay over .002
did you read his post? on a 100% payout ??? there are so many fees you kids have no idea about....trust me when i tell you that they are not making much if any money if he i on 100% payout....
sure...theres a variety of fees clearin firms pass back to the B/D....ACT fees, SEC fees, DTC fees, NSCC fees, Bank fees ( becuase the clearing firm is really the one extending the credit not the b/d itself.)...In addition DTC will be doing away with shortly the batched trade and billing clearing firms by execution ( they may have already started this)..then there is the software fees of the CLEARING firm...each trade uploaded comes with a price tag...most clearing firms use a system like Sunguard (Penson) or SIS, BETA and CSS ( SWS)....theres a lot more but thats a good start for now...do some of the huge instituions make profits? of course...but if you name isn't IB and your handing out .003 per share with a 100% payout...you won't last.
SEC fees are taken out of the trader's profits... I'm not sure if you haven't read the posts that have already explained that. I know of at least 10 firms that beat .003 and have 100%, some charging less than 1/3rd of that. I doubt they are taking a loss on each trade. They might not be making huge profits, but I'm sure they are doing well.
if your correct, then trading companies are the next subprime mortgage lenders. Every LLC i can think of works on a 1 price model. They pay X per share and X per month to the broker dealer they work for. They then know their costs, and charge accordingly to the traders. That is why i so strongly believe that rates should be .003 or less, as these larger LLC's as the other poster mentioned pay less than .001.
On the contrary...they are stupid...they do trades that are basicaly break even and hope to make it up in volume...but then the market tanks and they start bleeding...also, many of the fees Im talkign about are usually charged 45 to 60 days later in a big hit to the settlement account...lets put it this way....I have seen firms fail that were paying 15 cents per 1000 to clear...all you traders think there's this huge profit locked in yet there are so many little things you never take into account. the larger firms like IB and Bright are exceptions because of scales of economy and becuase they built up their volume at much higher costs back in the good ol days when trades were a penny a share or more.
EXACTLY!!! I wrote and article recently about HEDGE FUNDS being the next bubble to burts.....If it wasn't for the Sub prime mess all these hedge funds would have already been dragged before congress...make no doubt...its coming...the jist of my article was: . Recently, Bear Sterns and Goldman Sachs announced that their hedge funds had suffered combined losses of almost 9 BILLION dollars. These are hedge funds run by some of the finest and most well capitalized firms in the world. The mangers of these funds are some of the best and brightest on Wall street. This has me thinking and in some way panicking: If the best and brightest on Wall Street are taking hits to the tune of 9 BILLIONâ¦what about al these âHedge Fundsâ all across the country that have 1-2 million in common investors money? Is it possible that thousands of hedge funds and investors are completely upside down and donât even know it? Judging by my conversations with some of these self proclaimed hedge fund managers, I would say they have no idea what the true and actual value of their investment is. This is the scariest thing Iâve seen since the mortgage meltdown.
Ya but i cant call bear sterns, or goldman and get a prop deal. Thats comparing apples to mexican jumping beans. Im still not sure we are talking about the same things. The fact remains you can call any LLC and get .002 / 100% on 5million shares a month.