Futex - company's financial situation

[Philly_UK]

The company behind Futex is Independent Derivative Traders Ltd. As of 31 May 2014 they had exactly £1,049,610 of current assets on their balance sheet. Considering they had about 70 traders at that time, that's only £15,000 per trader. That's enough margin for around 10 lots of FESX. This means the company can't give its traders the size they would need in order to achieve P&L necessary for a decent living.
These are pure facts behind all the smoke and mirrors. You can trade company's funds but these funds are not very large. Then you have a desk fee of £1,500, 40% of your profits and a tax of 20%. Simple maths.

 

[DionysusToast]

That is rather presuming they have the same margin requirements as the man in the street.

 

[Solas0077]

Air is all over the place. Believe 2% of what you read and risk 2% of what you have.

 

[Philly_UK]

That is rather presuming they have the same margin requirements as the man in the street.

Well, in theory margin requirement for day trading futures might be zero as this margin has to be posted for clearing after the end of session. However, even if it was 25% of what the exchange requires, £1m is still not a lot in terms of a company claiming to back their traders financially.

 

[Philly_UK]

Air is all over the place. Believe 2% of what you read and risk 2% of what you have.

By "the place" you mean Futex specifically, or prop trading industry in general?

 

[rsh01]

Not sure how this stuff is accounted for, though you clearly do. So margins are definitely listed as assets, not potential liabilities (contingent perhaps)......say if someone blows up? In other words, are you 100% sure you are not misinterpreting the balance sheet?

Also let's say margin is classified as current asset, this could be equivalent of a shops stock, which if the shop required to sell stock to raise funds to continue to run as a going concern to say buy other more marketable stock then that would make sense classifying it as current, and liquid. However if Futex pulled their margin, the company could no longer operate as a going concern (unless it changed its business model etc).

So, what are all the other prop firms current assets? And please can you post the accounting standard regulation which confirms margin is posted as current asset.

Thanks in advance.

(Simple maths, flawed reasoning)

 

[rsh01]

Philly_UK
did you get rejected by futex and now seek revenge? (albeit very poorly)
I would give accountancy career a miss also.

 

[marcusant]

A grad starts out on a 50/50 split, when a trader hits 90/10 they would typically have 1mln+ on account and are essentially self backed. These are the guys with 100's of contracts.

The top 25% of traders have the most money and most size.

Consider how this skews the math.

M

 

[bootsyjam]

You don't need a lot of money to get a ton of leverage.
Recently got the following email from a prop firm to show you what i'm talking about:
£50k account [as in that's the money you have deposited with the broker:
max position limits EuroStoxx/Bund/Emini S&P’s:
Eurostoxx: 75 lots
Bund: 75 lots
Emini S&P: 45 lots
a combination of the three.

So doing the maths, balance of 1 million=
1500 eurostoxx max
1500 bund max
900 SandP max
a combination of the three.

It's still a lot, but also doesn't imply that there are traders doing really big business as the margin would be used up by the big boys leaving smaller traders locked out of trading?

 

[DT]

presumably some of the larger traders are self funded ergo they don't count... also if these guys are regularly taking on trainees then are they not going to have a revolving door of a dozen or so either trading on a sim or trading 1 lot... so they're not going to require much in the way of margin either

as for the rest then surely it is their net position that is important - presumably they don't need that much... I mean what sort of balance sheet does this sort of arcade really need - they've got a few dozen guys in some, presumably rented, office outside London... a bunch of PCs, some servers/leased lines etc.. few people in risk/trade support. The OP seems to portray it as something suspicious when it could well be fairly explainable.

 

[Philly_UK]

presumably some of the larger traders are self funded ergo they don't count... also if these guys are regularly taking on trainees then are they not going to have a revolving door of a dozen or so either trading on a sim or trading 1 lot... so they're not going to require much in the way of margin either

as for the rest then surely it is their net position that is important - presumably they don't need that much... I mean what sort of balance sheet does this sort of arcade really need - they've got a few dozen guys in some, presumably rented, office outside London... a bunch of PCs, some servers/leased lines etc.. few people in risk/trade support. The OP seems to portray it as something suspicious when it could well be fairly explainable.

And how would you explain that they assign only up to $20,000 per trainee trader, as they now openly state? If you lose that amount, you are out.

 

[DT]

I'm not sure what you're asking?

 

[Philly_UK]

I'm not sure what you're asking?

I'm just stating the fact that as a new trader you are only $20,000 away from being sacked. Not a big margin for error

 

[DT]

maybe not even that.... presumably some won't progress past the sim and others are perhaps going to lose less than that and get sacked...

 

[joselopezde]

http://www.profit-loss.com/articles/news/buy-side/injunction-halts-trading-at-futex

 

[vanillaman]

The company behind Futex is Independent Derivative Traders Ltd. As of 31 May 2014 they had exactly £1,049,610 of current assets on their balance sheet. Considering they had about 70 traders at that time, that's only £15,000 per trader. That's enough margin for around 10 lots of FESX. This means the company can't give its traders the size they would need in order to achieve P&L necessary for a decent living.
These are pure facts behind all the smoke and mirrors. You can trade company's funds but these funds are not very large. Then you have a desk fee of £1,500, 40% of your profits and a tax of 20%. Simple maths.

That is a little presuming indeed.... It is possible that current assets that they post publicly are not part of the actual fund itself which may well be locked up in some BVI shell, I am guessing that most of us have life experience and no how to make the tax man uncomfortable, so in my opinion that is a poor judgement measure for any company. Public record is normally full of holes.

 

[bootsyjam]

That is a little presuming indeed.... It is possible that current assets that they post publicly are not part of the actual fund itself which may well be locked up in some BVI shell, I am guessing that most of us have life experience and no how to make the tax man uncomfortable, so in my opinion that is a poor judgement measure for any company. Public record is normally full of holes.

Well considering what has just happened there then maybe not

 

[c6ackp]

Well considering what has just happened there then maybe not

What just happened?

 

[bootsyjam]

http://www.profit-loss.com/articles/news/buy-side/injunction-halts-trading-at-futex

Can't find any more info. Have emailed the person I know there but lost his number as my new phone dropped a whole bunch of them as they weren't saved to the SIM on my old phone.
A mate of mine who knew someone who used to work there has been told that they have 'gone bust' but could not get any more info other than that this ex-trader at futex said "they book sh*t." An interpretation of that=they don't book decent profits which explains their courses to make income. So it's all smoke and mirrors.

Judging from the info it appears a trader tried to take money out and found out that he/she couldn't, most likely due to lack of funds in the comingled accounts (I don't think trader funds were segregated at the futex level, but were segregated at the Clearer (Marex) level). Hence the injunction. Shocking stuff.

 

[counter_violent]

http://www.profit-loss.com/articles/news/buy-side/injunction-halts-trading-at-futex

Can't find any more info. Have emailed the person I know there but lost his number as my new phone dropped a whole bunch of them as they weren't saved to the SIM on my old phone.
A mate of mine who knew someone who used to work there has been told that they have 'gone bust' but could not get any more info other than that this ex-trader at futex said "they book sh*t." An interpretation of that=they don't book decent profits which explains their courses to make income. So it's all smoke and mirrors.

Judging from the info it appears a trader tried to take money out and found out that he/she couldn't, most likely due to lack of funds in the comingled accounts (I don't think trader funds were segregated at the futex level, but were segregated at the Clearer (Marex) level). Hence the injunction. Shocking stuff.

You could ask trader dante via social media, he must know people who work(ed) there