Creating an IB programme for retail traders

[SlowlyButSurely]

Hi all,

So I was thinking about the idea of creating an IB (Introducing Broker) setup where retail traders can come together to get discounted spreads and comms from brokers. We would only approach proper DMA brokerages where we would be trading on the underlying market, no spreadbetting or the like.

The idea would be to come together in the form of an IB. So we could call ourselves 'T2W Trading Group' or 'Retail Trading Group' etc and we could approach firms and say:

'We are a trading group which does about x volume per month in these markets. What kind of commission reductions can you give us on volume like this?'

I would opt for commission reductions on top of market spreads as this will be the most beneficial in calculating costs there and then. If we start doing rebates etc it could get complicated especially as we will need to keep every account seperated and individual.

No one person will have power of attorney or anything like that, there will be no leader. It is simply a bunch of traders looking for discount in numbers.

I know the idea behind this could work, but have any of you any suggestions, criticisms etc to add? Would you feel uneasy about something like this? What could go wrong etc?

Cheers,

SBS

 

[BAGGIES]

interesting idea.. please get in touch with me I may be able to help set something up for you.

puttjatt at hot(mail) dot com

Pal

 

[highbury fx]

Hi all,

So I was thinking about the idea of creating an IB (Introducing Broker) setup where retail traders can come together to get discounted spreads and comms from brokers. We would only approach proper DMA brokerages where we would be trading on the underlying market, no spreadbetting or the like.

The idea would be to come together in the form of an IB. So we could call ourselves 'T2W Trading Group' or 'Retail Trading Group' etc and we could approach firms and say:

'We are a trading group which does about x volume per month in these markets. What kind of commission reductions can you give us on volume like this?'

I would opt for commission reductions on top of market spreads as this will be the most beneficial in calculating costs there and then. If we start doing rebates etc it could get complicated especially as we will need to keep every account seperated and individual.

No one person will have power of attorney or anything like that, there will be no leader. It is simply a bunch of traders looking for discount in numbers.

I know the idea behind this could work, but have any of you any suggestions, criticisms etc to add? Would you feel uneasy about something like this? What could go wrong etc?

Cheers,

SBS

Its a good idea. Its also one that has been around for a long time and simply uses the economy of scale to negotiate good deals for a collective group. Any spreadbet, CFD or DMA firm would be interested in proposing a deal to you and you should make contact with some of them to see what share of the commissions or spread they could give you.

50% rebate of spread paid is a figure that is given to so many IB's who introduce a good amount of business and flow to the broker. You shouldn't have any trouble getting this if you manage to introduce 50 clients or more or do aggregated volume of $1m notional per day.

Start with the reliable firms who have good reputations for paying their IB's on time.. firms like City Index, IG Index and ETX Capital all have good reputations for paying introducers on time.

Keep it simple in your conversations with them as you may bring some problems on yourself if you start discussing POA etc. A POA is not required by someone who is just introducing self trading clients. As soon as you mention POA it suggests you want to do discretionary management which as a regulated activity could result in the broker wanting assurance from you that you are either regulated to carry on that activity or that you are not. If you are not then there is little point in mentioning it at all.

Ask them to not only share the spread and commissions but to also either reduce the overnight funding rates or pay back a percentage of those costs.

Good luck, let me know if I can help you any further..

 

[SlowlyButSurely]

Thanks for the suggestions especially regarding the reductions in overnight financing. Perhaps with enough people/volume they could arrange it at near cost price for us.

I like the idea of reduced comms over rebates and I would probably discuss an annual/bi-annual review so that if more people join and we do more volumes we can negotiate even lower comms.

I will probably look to go with a professional futures broker where orders are traded on exchange. If there are a lot of people here wishing to trade spot products then we could use an MTF like LMAX.

So far there's not been much interest though