Whats The Cost For Self Clearing Firm??

Discussion in 'Prop Firms' started by AutomatedTRader, May 9, 2003.

  1. DOES anyone know the real clreaing cost for a self clearing firm????

    does .0004 sound about right or is it closer to .0001

    IM very serious about this question...the thousandth of a penny makes a huge diffrence to me. If anyone has any information please share it with me.

    Thank YOU
  2. It all depends on the volume and expenses that the firm has. Self clearing is a fixed cost. So the more volume they have, the more they can spread the cost around. If a self clearing firm has $250,000 in costs a month, which is running barebones, to have a clearing cost of .0004, they would need 625,000,000 shares per month just to break even. So you can see, unless your huge, they don't clear at .0004. Everyone always forgets about the the back office, IT, rent costs, etc...

    Clearing costs for most stand alone prop shops is somewhere in the neighborhood of .002, after all costs are factored in. But if you think you can use this info to muscle them to give you rates right around there, and provide you with hardware and software, I wouldn't count on it, cause they are not in the business to make $50 on you.
  3. U say that 250K is a fixed cost...and thats a bar bones clearing firm

    does a clearing firm have any variable costs??? like (SG & A) fees?? which are accounting fees?? where the clearing firm would be charged x amount per share processed???
  4. I know that even though a firm is self clearing they do have a variable cost for having that right. I don't know what the exact number is, but it is pretty small.

    Other variable costs, not really, but as they grow, their fixed cost will continue to grow as they need to hire more accountants, tech, legal, etc...

    In order for firms to bring their costs to where you want them, there would need to be a revolutionary software system that can do the accounting with minimal problems, so you can have one accountant just oversee it, and a software package that would keep tech issues minimal, allowing only a tech or two to take care of them, and T-1 lines and servers that can handle more information w/o having to spend money on additional servers and software as the firm grows.