I agree, except for the comment on SLK and rates. With 250K, we got less than .01 easily. I don't know if we are comparing apples to apples though. We did merger arb, cleared through slk(goldman) and used redi plus. My sense is that this is a different deal, but my experience is that we paid far less than .01 per share. Goldmand (slk) has a great short list as well, I don't recall any unavailability of borrowed stock. And, their accuracy in confirmations was very good.
We're paying our Prime (SLK) 1.25 cents per share, $15 minimum per ticket. We average 500,000 shares traded per month and have an account size of $2.3 million. We've been with them for almost two years. They pay interest on short proceeds , have great customer service, a good short list, decent reports, but have done zero capital introduction. Does the 1.25 cents/$15 minimum rate seem reasonable? It amounts to a 4% cost per year on the portfolio assets.
Do you get any soft-dollar perks? If not, there's nothing in there that you listed that a qualified direct access broker (IB, Genesis, Redsky, etc.) doesn't provide, except at 1/4 the cost. You have to be able to quantify that additonal comission over market (about 3-4x), for you to be able to decide if it's the right thing for you. From my shoes, though, doesn't sound like they're doing much for you. Is it worth ~3% per year on assets?
Does this mean that props such as Bright who use Redi are paying this amount or is the commish closer to the 1/2 cent norm, and the rate you mention is prime cut? I know people here have said Redi is more expensive compared to Assent, et al, but I can't imagine it would be that far out of tune. Or am I wrong?
No, we do not receive soft dollar perks. The interest rate paid on short proceeds is better with SLK than IB, but that probably adds up to an advantage somewhere between 0.5% and 1%. For marketing, we value being able to indicate that Goldman is the custodian for the stocks. We don't pay for data and are given RealTick, but clearly those are not so costly. Customer service is phenomenal -- personal broker picks up on the first ring 90% of the time, and she'll run a customized report and email it usually within an hour. My customer service experience with IB pales by comparison.
I won't argue with you about IB's CS, heh. That said, I do know a couple traders there with 1M+ accounts. Same with Genesis, and I know of a few hedge funds that do quite a bit of volume through them. Any broker who clears through SLK would let you still be able to use the Goldman custodian marketing. I hear you on the customer service though, most of these shops don't have the infrastructure to provide what you're probably used to. Still, I turnover about 1.5M shares a month and I couldn't imagine giving up ~a penny a share for customer service above and beyond what I already get. It may not be such a big deal now, but I would think as your volume increases, that premium in dollar terms will start to get non-trivial.