commision schedule for trading arcades

ballsofgold

Junior member
27 0
I am new to this forum and have a quick question on commission costs when working for an arcade such as Marex, Tower, etc.

I apologize if this question has been discussed to death but I cant seem to find anything on it through the search function.

Most brokers quote commissions in two ways - 1.) all-inclusive including exchange fees or 2.) just the brokerage commission not including exchange fees.

AMP Cost Calculator

When working at an arcade, I understand from reading the forums that commissions are supposed to be cheaper than a regular broker, especially if you are doing 10k+ contracts a month at around .80 cents per contract all inclusive. But how is this possible to be any cheaper when you have the standard exchange fees.

So this brings me to the essence of my question, what are commission rates for arcades on an all-inclusive basis including exchange fees. If they are in fact cheaper than regular brokers, how are the arcades able to make money? Or simply put, have i misunderstood the fact that arcades still have to charge exchange fees on top which would take the total commission costs to 4/5 usd r/t.

Many tks in advance.
 

ballsofgold

Junior member
27 0
additionally to my above query, what I am trying to assess is the following:

if i didn't have an issue with capital, meaning that I could go self funded, what would be the advantage of going to an arcade vs just setting up segregate futures account with an FCM. I am looking at AMP futures again, please note I do not have an account with them nor am I trying to advertise for them, but their intraday margins are lower for day traders. Meaning that with my capitalization, I would be able to get enough leverage I need to reach my desired risk/reward appetite trading spreads and rv.

AMP Margins

so this then leads me to the question, should i trade from home or can i avoid having to pay for an egregious desk cost in the city, whichever way I am able to achieve that. I know the advantage of being in an arcade means being around other traders. But other than, if the commission rates at an arcade or definitely cheaper such as 2 usd r/t for ES mini at an arcade vs 4.5 usd r/t at a broker, then all I have to do is trade around 500 contract and above in order to justify having a desk cost in the city, bc above 500 contracts you are actually saving money.

please feel free to add some thoughts.
 

pitarcheo

Newbie
7 0
hi balls,
am in a similar position to you just need a desk with cheap commisions. would be self funded. if you hear of anywhere could you give me a shout
 

ldn-capital

Newbie
7 0
Looking FOR TRADING DESK

hi balls,
am in a similar position to you just need a desk with cheap commisions. would be self funded. if you hear of anywhere could you give me a shout

Hi,

Hope all is well i feel i may have an option suitable.

Please email [email protected]

Regards
 

Parky

Active member
247 30
OK couple of quick points, how can an arcade be cheaper than going direct to a GCM, very simple arcades have economies of scale, they have large numbers of traders and one clearing agreement with a clearer which means they can leverage. GCM's do not like contracting with individuals, why would they, they would far rather deal with an arcade at an omnibus level.
Segregation? this has been flogged to death, segregation is a complete fallacy, all this means is clients’ money is kept separate from house funds, it is no guarantee of protection as you will have seen from Man Financial, Lehman’s, Griffin etc. etc., all segregation does is ensure that client money is safe if the Bank goes under, it does not protect you if a client in that client segregate pot (which is omnibus) goes belly up at which stage the Bank/Clearer has an obligation to make good the loss to the balance sheet of the Bank/Clearer, if the loss is in excess everyone loses money which is not usually the kicker. The problem is when a regulated company goes under the regulator will freeze all funds and can take ages to sort out the mess meaning even if you have money left it may take months if not years before you can have it. Also Arcades are not usually FCA regulated to take client money so have a look on the FCA website, if they don’t and what you are actually doing is joining an LLP partnership or the like you have no segregation from house funds anyway.
 

Parky

Active member
247 30
As for the inclusive, exclusive of fees, smart arcades will always quote exclusive, why? because the exchanges change them and with the increase in regulatory fees etc. it is likely they will go up (Watch this space once ICE really starts to change things at LIFFE) so if you have inclusive and the exchanges increase fees then the arcade has just lost money. But then not all arcades are that smart.
The other points are these, do you actually have direct connectivity to the exchange or do your trade route via and internal matching engine? In which case although you are charged exchange fees this is often a net win for the arcade if they have managed to match you trade internally before it ever gets to the exchange. Lastly exchanges often incentivize arcades with fee reductions again because they have collective bargaining, all their traders volume combined may attract fee reductions, does your arcade pass those on? Chances are if you have an inclusive rate then they are making money elsewhere via one or both of the above.
 
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