I wonder how come not a single US firm has copied their business model yet - zero comission, liquidity rebates, use of firm capital and 30% payout to traders. They hire 20 y.o. kids who have no idea about market whatsoever and within 3 months those kids make 5-10K for themselves a month on average. Not too bad, huh? They don't even have to get a licence to trade. Each trades 1 mil shares a day at least. A break even trade could be profitable because of ECN's credits. How can US prop. firms with 0.05 - 0.1 comissions compete with this canadian monster? Am I missing something?
Hmm. How many traders who get 95-100% consistently make 5-10K a month? I thought it's about money, not percentage.
Didn't these guys have some troubles with compliance and the SEC or NASD? Thats reason enough for me.
More traders than those who only get a 30% payout. Have you been hanging out in those Vancouver smoking dens?
Rebate trading is only one of countless ways to make money in the market--and at a 30% payout it's far from the most profitable method. Unfortunately, by rebate trading being publicized its effectiveness is slowly being eroded. Once this happens, Swifts undiversified business model may go down the tubes.
Swift Trade negotiated a clearing deal with Penson Financial Canada (my guess is that Penson USA doesn't know about this) where they pay a per stock rate to clear, say for example $25 per stock symbol per day. They put 10 trader on each stock therefore making their clearing/commission costs virtually Zero! They use their own inhouse software so they don't have to pay out a software fee to a third party, therefore their software cost was basically a fixed upfront cost. Also they have negotiated better ECN rates with all the big ECNs because they do 150-200 million shares a day. One more thing, in Canada a Prop or Pro trader doesn't have to be licensed if he is trading Firms capital and the margin on Firm capital is huge, basically 10-1.