Looking for Prop/Arcade to trade remote...

[indextrader]

If any of you guys know of a UK trading firm/arcade that has access to most major European stock exchanges like LSE, Xetra, Euronext, Madrid, etc. please post here the firm's name.

Need to trade remotely, though.

I can put up capital if necessary as long as it's a good/reputable firm.

btw, what sort of fees are usually passed onto the trader?

Thanks!

 

[TomTom]

Why would you want to put up fees to a prop firm when you can use that capial to trade your own account ?
After desk fees and the hastle the reward for effort is minimal

 

[indextrader]

Great point.

I trade US markets full time as a non-professional and haven't seen much need to join any prop shop.

My interest in joining a UK firm is for 3 reasons...

1. Commissions paid would have to be less than what I pay retail.

2. I need access to most European cash equity exchanges.

3. I need to avoid stamp duty (especially UK stamp duty) and a couple of
guys have told me that prop firms do not pay it. I'm not sure what mechanism they use
or what rules they may circumvent in avoiding SD but if anyone knows, please post.

Why would you want to put up fees to a prop firm when you can use that capial to trade your own account ?
After desk fees and the hastle the reward for effort is minimal

 

[Directional]

3. I need to avoid stamp duty (especially UK stamp duty) and a couple of
guys have told me that prop firms do not pay it. I'm not sure what mechanism they use
or what rules they may circumvent in avoiding SD but if anyone knows, please post.

With stamp duty there are two exemptions, Market Maker Exemption and Broker Dealer Exemption.

Market Maker Exemption is for frims where they act as market maker in the securities.

Broker Dealer Exemption is available when a firm is a member of the ISE or LSE and where shares are acquired as principal.

I imagine most prop firms would come under one of these two categories.

 

[indextrader]

Arbitrageur,

So you're saying that it's entirely legal and a fairly straight-forward process that prop firms are not taxed on stamp duty?

Looking at a few prop firm websites, some make no mention of being an exchange member and instead will say that they "clear thru xxx clearing" and xxx clearing is a member of LSE and is regulated by the FSA.

So, no licence/registration is required to open a prop shop?

Thanks for your input.

index

With stamp duty there are two exemptions, Market Maker Exemption and Broker Dealer Exemption.

Market Maker Exemption is for frims where they act as market maker in the securities.

Broker Dealer Exemption is available when a firm is a member of the ISE or LSE and where shares are acquired as principal.

I imagine most prop firms would come under one of these two categories.

 

[Parky]

Indextrader,
You have sort of answered your own question a Prop shop can set up without any market memberships or regulatory status and basically pay to use a "hosted" access, usually via their clearer. This can be done remotely, i.e. you set up an office and put in a fixed point to point communications line to your clearer's trading hub patch yourself in and away you go, some will take space in a clearers own arcade.
Some are even cheaper than that connecting over the internet.
However like anything in life you get what you pay for, these cheap and cheerful arcades are not masters of their own destiny, the more professional shops insist on direct connectivity meaning they have to become exchange members and some exchanges insist that in order to become a member you must be FSA registered. These companies invest heavily in their IT and infrastructure, this is a commitment financially and a sign of a more professional outfit. Some of these are LSE members but even these are very unlikely to settle and so will have a clearing agent. Also in terms of LSE traders most are day traders and as such they never take delivery of the underlying stock which makes it stamp exempt business.

 

[indextrader]

Hi Parky,

Thanks for your input here.
It's interesting that you define whether stamp duty is payable depending on whether delivery of the underlying stock takes place.

If I may continue on the same line of thought, then, would a trader at a prop shop be obligated to pay stamp duty ONLY if he *DID* take delivery of the underlying stock?

Are there other "rules" used in figuring out who pays stamp duty and when it applies?

I really appreciate everybody's contribution to this thread!

index

Indextrader,
Also in terms of LSE traders most are day traders and as such they never take delivery of the underlying stock which makes it stamp exempt business.

 

[Parky]

Like anything Inland Revenue related nothing is straight forward. If you "day trade" on a proprietary basis and are always flat and never actually take stock from the market you are adding liquidity and you are not stamp eligible, likewise if you trade stock as a hedge against exchange traded options then you can claim exemption via LIFFE.
As a non member however if you take a long position and take the stock it is stampable, hence the use of CFD's rather than the equity markets themselves, the benefit is they are non stampable.
That is my understanding anyway!

 

[msrxlbp2]

Why don't you just trade on synthetic and hence avoid stamp duty?

 

[indextrader]

That's kind of what one firm is suggesting. Maybe do CFD's on UK stocks and trade the regular shares on non-UK stocks. It'd probably work as long as the platform/broker accomodates both.

I was under the impression before, that spreads would be wider with CFD's but was recently told by a broker that there's hardly any difference and in many stocks the bid/ask on the CFD just about matches that of the underlying stock.

What are you guys' experiences in that regard?

Thanx!

Why don't you just trade on synthetic and hence avoid stamp duty?

 

[mleung]

IndexTrader,

I am pretty much in the same situation and looking for an arcade to trade LSE/ChiX stocks. Have you got any success in find an good arcade? Great if you can share your findings. Many thanks.