Trading Arcades have had their day

[meanreversion]

That might be in reference to our dealing room in Hanover Street. We're up to 7 people, all self backed, we're just splitting the costs of renting. If we see further demand, we could potentially get a larger space.

 

[Parky]

Once again it is a matter of views and little to do with fact.
We have had third party confirmation from Exchanges and independent network advisors that no one is "quicker" than our co-lo access to the markets, that is not to say they are not the same so we are more than happy to rise to any lame "Pepsi" challenge.
In terms of big versus small big corporations generally mean big bureaucracy, big banks and institutions have to have complicated firewalls and protection programs, they also have a "wasn’t me guv" attitude when slowdowns or errors occur and generally because you have more staff, more managers and a more complicated and consolidated network if you ever do get to the bottom of a problem it takes time.
I think some contributors to this thread appear to have axes to grind rather which is a shame and as I have said "arcades" (an old fashioned and defunct term) have contributed to the problem as many were ill conceived, did cut corners and gave the industry a bad name but consider this, Kyte, one of the biggest and long established "arcade" was bought by GFI for £ 38 million last week, not bad for something which some here would try to convince you have "had their day" and offer no competitive advantage. I consider this to be proof enough that this debate has more to do with ego and hurt feelings than real fact.

 

[weakpunter]

Wotcha Parky, long time no speak see that youve crawled out of the woodwork again ,must really bother you this thread, again your harping on about axes to grind when its been made patently clear why this thread was started ............... to save money for traders and show them viable alternatives to arcade/prop shop whatever you want to call it, I can tell you something for nothing , Iam both scalping and algo/automated trading with my FCM , no complaints Iam dealt with promptly
and with courtesy, I dont get any sense of beaurocracy where Iam, Iam treated with the utmost respect everything is on time, efficient and now that even latency issues have been solved with co hosting etc then there really is nothing for you to bleat about........it seems you are the one with the axe to grind because you just cant accept facts that there are cheaper and equally technologically adequate solutions out there compared to arcade/propshop/prodealing etc etc all the same really.

 

[meanreversion]

This is indeed a very emotional thread!

 

[Parky]

Idon’t accept your argument but I respect it, working from home suits you and it suits quite a few, especially those with experience, happy with their trading style and happy to trade in isolation or small groups. It will not suit everyone so I am here to offer balance.
Anyway I think GFI have given £ 38 million reasons why your wish for the demise of trading "arcades" is premature. Tower Trading, Schneider’s, Kyte, FUTEX & Xconnect are doing well and continue to attract experienced and professional traders. It is a matter of choice only, and of course opinion, to which everybody is entitled. Informed choice is always the best choice.

 

[meanreversion]

I spoke to Schneider a couple of times. Their terms were a 90:10 split (and I was completely self backed) and around £2k a month for desk rental and systems all in. I struggle to see why any self backed trader would go for that deal, but then maybe I don't use the leverage some other guys do.

I spent a few months at Futex - they're a fairly professional outfit. There was of course no "split" as it was all my own cash any way. But the desk fees became fairly ruinous (£1,800/month) which is why I set up the office dealing room (£300/month).

 

[weakpunter]

Yes and thats what Iam giving..... informed choice,and about GFI purchasing KYTE , I think youre forgetting to mention that a substancial reason for that purchase is to aqquire KYTE brokering which has bugger all to do with a local trading 50 bobls outright, that purchase is for their overall business of which locals punting futures paying desk fees is not the be all and end all of kyte´s business they have umpteen different aspects of their business , I know the management there very well and think they are a great company, but it dosent answer the original topic of debate regarding your average
joe bloggs local and the elements that effect him/her . Yes if youve got a 500 grand account and so on so forth then you couldnt give a tuppeny damn about desk fees and blah blah blah, but this thread is to address the issues of Mr 20 bunds/50 shatz/100 Euribor/10 eurostoxx guy paying 3000 per month seriously eating into his profits if he´s giving a split aswell etc etc. and talking about isolation Iam not in isolation at all .......I am at home true but I have my squawk , Ive got 30 of my ex arcade trading pals on msn messenger conversing with me throguhout the day discussing the figures the volume the same stuff we discussed when we sat at a prop shop together.

 

[Parky]

meanreversion,
I know trading rooms that are happy to offer 100% to traders with good records and who are happy to leave capital in their accounts but you are right these are traders who tend not to require leverage or run overnight positions.
Some traders have trading styles that mean they have extreme peaks and troughs and so are happy to stay somewhere that will provide capital when they are struggling and give up a percentage and then buy the house out when times are good but just have that flexibility. Most traders are also much more cosmopolitan and within a trading room a lot of crossbreeding takes place and traders are able to swap asset classes and even trading platforms easily and so they do not become entrenched.
As I say, it is very much horses for courses, trading rooms do not suit everybody, trading from home doesn’t suit everybody, no one is right or wrong here, despite what others might imply. Trading rooms have their place that is all I am trying to say.
As for the costs, £ 1,250 per month is the cheapest we have ranged to £ 2,000.00 for a complicated set up with lots of screens so your costs look about right, again ruinous if you are only making £ 3,000 to £ 5,000 a month in P&L but pittance if you are making tens of thousands a month.

 

[weakpunter]

meanreversion,
I know trading rooms that are happy to offer 100% to traders with good records and who are happy to leave capital in their accounts but you are right these are traders who tend not to require leverage or run overnight positions.
Some traders have trading styles that mean they have extreme peaks and troughs and so are happy to stay somewhere that will provide capital when they are struggling and give up a percentage and then buy the house out when times are good but just have that flexibility. Most traders are also much more cosmopolitan and within a trading room a lot of crossbreeding takes place and traders are able to swap asset classes and even trading platforms easily and so they do not become entrenched.
As I say, it is very much horses for courses, trading rooms do not suit everybody, trading from home doesn’t suit everybody, no one is right or wrong here, despite what others might imply. Trading rooms have their place that is all I am trying to say.
As for the costs, £ 1,250 per month is the cheapest we have ranged to £ 2,000.00 for a complicated set up with lots of screens so your costs look about right, again ruinous if you are only making £ 3,000 to £ 5,000 a month in P&L but pittance if you are making tens of thousands a month.

its not just ruinous if your making 3-5 k per month but ruinous if your making 10-15 k, thats serious overhead 2500k per month + 20/30 percent split and talking about leverage Iam getting 4:1 intraday from my FCM which is identical to arcade intraday leverage thats what STA quote 4:1 and thats with giving a split to them, answer this Parky why do 90% of pro traders in th US use FCM´s rather than go to arcades, are American traders more stupid than british ones, do they do less vloume or make less money or do they not care about technological aspects....the real truth is that we are set in our ways in the UK with regarding change and we´re not particularly adventurous regarding seeking out alternatives, you mentioned in one of your previous threads that ex bank algo traders were joining you in droves.theyre not doing that because of bank beaurocracy ,theýre doing that because they want to earn the money for themselves rather than be on a salary doing it for the bank , its got nothing to do with managment and such.

 

[Parky]

The answer to the US question is very simple, culture, Americans have a history of active trading going back decades, day trading shops for equities are as frequent and accepted as bookies are in the UK, most high streets have them and so the trading over the internet model is more or less ingrained. It is no coincidence that outfits like Interactive come from the US. However that is not to say trading rooms don't exist either in the cities that once housed the Open outcry markets trading rooms exist, Transmarket being the biggest and most well known.
As for your examples I was assuming no split, if you are self financing and making £ 10-15k a £ 1,500 - £ 2,000 charge from you trading room could hardly be construed as "ruinous".

 

[Parky]

As for Kyte you are correct, Kyte is far more than just a home for Prop traders and housing traders and trading groups is only a part of what they do, they have brokers, they have algos', they have derivatives, Forex, equities and fixed income, Kyte is in fact a mini clearer which is why GFI have bought the 70% stake. There are not many GCM's left so rather than start from scratch in setting up a clearing operation Kyte makes a shrewd addition.
But the same is true of Schneider’s and Xconnect, both have much the same structure and hopefully the move to force OTC's and principal to principal trades on exchange will benefit everybody.

 

[weakpunter]

@parky if you add 2500 k + split + commuting expenses then it certainly adds up , it probably adds up to a couple of 5 star holidays for wife and kids a year..so why should I concede my holiday money
for the chance to sit around in Liverpool street, and secondly my account minimum in order to have a fully self backed 100% account with an FCM is 50% less than the cost of having a part backed one in the city ! ! ! Like Ive said before price wise your better off, greater choice of markets and platforms,
and latency issues for those who need ultimate connectivity like algo/automated traders to eurex for example, can be hosted like Iam directly in the Equinix data centre Frankfurt exactly where Eurex is
so the only difference between me trading here and sitting in your office or any other is I dont get to hold the hand of the guy sitting next to me or listen/smell his farts, the truth is in the US they are far better hagglers than us in the UK and just wouldnt stand for paying over the odds no matter how big a trader or wealthy they were.........now thats American business culture!

 

[Parky]

You keep adding a split, as I said above if you willing to leave sufficient capital on your account no split would be applicable at some trading rooms so you keep 100%. You also keep inflating the desk costs to £ 2,500, they range from £ 1,500 upwards, of the 75 traders we have in our central London office, only two or three pay £ 2,500.00 and they have enormous rigs and make full use of the onsite IT.
However you are right, commuting is a pain, I was 20 minutes late again this morning courtesy of network South Eastern, where is that lottery win when you need it!

 

[pboyles]

@parky if you add 2500 k + split + commuting expenses then it certainly adds up , it probably adds up to a couple of 5 star holidays for wife and kids a year..so why should I concede my holiday money
for the chance to sit around in Liverpool street, and secondly my account minimum in order to have a fully self backed 100% account with an FCM is 50% less than the cost of having a part backed one in the city ! ! ! Like Ive said before price wise your better off, greater choice of markets and platforms,
and latency issues for those who need ultimate connectivity like algo/automated traders to eurex for example, can be hosted like Iam directly in the Equinix data centre Frankfurt exactly where Eurex is
so the only difference between me trading here and sitting in your office or any other is I dont get to hold the hand of the guy sitting next to me or listen/smell his farts, the truth is in the US they are far better hagglers than us in the UK and just wouldnt stand for paying over the odds no matter how big a trader or wealthy they were.........now thats American business culture!

Actually with some FCMs there is no account minumum, of course you have to have enough to cover the margin but there's no specific minimum.

 

[weakpunter]

@parky your alright mucker have nothing against you personally , am enjoying debating with you
but Iam not inflating the desk fees my pals at tower and STA are paying 2700 quid a month
and the cheapo option of x-trader one exchange and x study is near 2 grand with pc + desk at STA

I have a new spread for you parky SHORT CONNEX LONG EUREX (sorry I think connex has changed to south eastern) but I think you get my joke

 

[Parky]

weakpunter, a pleasure as always and I never take these things personally.
I cannot comment on STA desk fees but i do not they were put up after Christmas, like all purchases it pays to shop around.
Unless you are stuck in Kent in which case it is Southeastern or a long sweaty drive! Still in this weather i wish I was at home!

 

[weakpunter]

weakpunter, a pleasure as always and I never take these things personally.
I cannot comment on STA desk fees but i do not they were put up after Christmas, like all purchases it pays to shop around.
Unless you are stuck in Kent in which case it is Southeastern or a long sweaty drive! Still in this weather i wish I was at home!

No 5.30am alarm clock and the grubby journey into the city for me anymore parky,
Iam in my bermudas and flip flops in front of my TT screens
I dont want to rub your nose in it, but I knocked ole blighty on the head a good many moons ago and exchanged my london home for a villa in Marbella, so pardon me but am
just going to have a bit of tapas and a dip in the pool before the stateside session kicks off lol,

 

[mkyfutures]

Hi Weakpunter,

Am currently trading from home through a well know FCM, am really interested in more details of the rates you were given and name of the company as I am thinking of changing.
Thx

 

[weakpunter]

no probs I will pvt message you

 

[charliechan]

weak punter - which fcm are you with?

parky - kyte dont clear business do they? last time i was talking with them, they only did execution - all the clearing was done by newedge. £38m is a lot of money for an out fit that keeps it's 'datacentre' in a converted broom cupboard above a pizza restaurant - next door to a brothel. lol.