Start a prop shop?

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Old Feb 25, 2011, 5:06am   #1
 
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Start a prop shop?

Hi guys,

I'm new to the forum but have been lurking for a few months and relatively new to finance. By that I mean I am in my first year of a Finance & Economics degree.

Just a random question but how much do you think it would cost to start up a prop trading firm?
It's obviously not something I'm looking at doing in the foreseeable future but perhaps one day. I'd just like your opinions on how much you think it would cost.

Thanks

Mike
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Old Feb 25, 2011, 6:55am   #2
 
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Re: Start a prop shop?

Get really profitable and prove it, get backing from a big city instituiton and it won't cost you a penny. Its that easy.
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Old Feb 25, 2011, 7:28am   #3
 
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Re: Start a prop shop?

mike120 started this thread What if you were to do it on your own? As in just raising the capital on your own?
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Old Feb 25, 2011, 8:33am   #4
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Re: Start a prop shop?

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Originally Posted by mike120 View Post
What if you were to do it on your own? As in just raising the capital on your own?
probably about 100k.
doN;T FORGET EVERYTHING YOU NEED INCLUDING RISK MANAGEMENT SOFTWARE, LAWYERS FOR TRADERS' contracts, any FSA regs if needed, payment processing software, equipment, etc.
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Old Feb 25, 2011, 9:45am   #5
 
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Re: Start a prop shop?

mike120 started this thread Wow, thats alot cheaper than i thought. Is the 100k including the actual investment account. Not sure if thats the right term but you know what i mean
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Old Feb 25, 2011, 9:52am   #6
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Re: Start a prop shop?

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Originally Posted by mike120 View Post
Wow, thats alot cheaper than i thought. Is the 100k including the actual investment account. Not sure if thats the right term but you know what i mean
Quote:
By that I mean I am in my first year of a Finance & Economics degree.
got a spare £100k as a student have you?

Talk to arabiannights, he might know although he may ask you how your balls smell first.

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Old Feb 25, 2011, 10:03am   #7
 
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Re: Start a prop shop?

mike120 started this thread Yeah i wish!I just assumed it would be a lot more as in 1m+.

Only got £99,995 to go 'till i can do it then!
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Old Feb 25, 2011, 10:04am   #8
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Re: Start a prop shop?

100k is too low i think. you do need money to back traders after all

things like

* exchange memberships
* mifid / BIRPU / fsa regs (and capital requirements)
* solicitors / accountant bills
* operating capital to last until you make profits
* trading capital, 25k say for 20 traders

I reckon you'll need about 1.5mm and upwards
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Old Feb 25, 2011, 10:24am   #9
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Re: Start a prop shop?

Where are all these traders going to sit? You'll need to take out a 3 year lease on a space which will need work doing (desks, chairs, wiring and so on). Then you need to employ someone to be your office manager etc. I would say £1mio is a good starting point.
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Old Feb 25, 2011, 11:28am   #10
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Re: Start a prop shop?

Quote:
Originally Posted by mike120 View Post
Hi guys,

I'm new to the forum but have been lurking for a few months and relatively new to finance. By that I mean I am in my first year of a Finance & Economics degree.

Just a random question but how much do you think it would cost to start up a prop trading firm?
It's obviously not something I'm looking at doing in the foreseeable future but perhaps one day. I'd just like your opinions on how much you think it would cost.

Thanks

Mike
As a Finance and Economics student, the questions you should be asking are: Is it worthwhile to open a Prop Trading firm and Why would anyone want to do it?
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