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Becoming an Exchange Member (Leasing Seat)
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Becoming an Exchange Member (Leasing Seat)

  #21 (permalink)
Trade with the flow
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MetalTrade View Post
I know a big volume trader and he does NOT have a seat. He showed me the commissions he pays. He pays lower than half of what I pay.

It's even lower than the listed 'seat' prices. When I asked him why he doesn't have a seat he asked me promptly: Have you looked at my price level ? Why do I need to pay for a seat ?

Moral of the story: You don't need a seat to have even lower commissions.

I think you are confusing commissions & exchange fees. Commissions are determined by the broker and your friend could have any commission rate even $0. Exchange fees are determined by the exchange and are fixed.

You cannot compare your friend's commissions to the exchange fees as they're separate and one would pay both.

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  #22 (permalink)
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He claims to have a discount even on the exchange fees while he's not a member. Maybe it's his broker who is fixing 'certain' things. Because I agree that if the exchange would give discounts it would be disclosed.

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  #23 (permalink)
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I don't think my personal discretionary volume is high enough to warrant leasing a seat right now. But I was trying to come up with a easy way to get around this limitation by sharing the seat lease with someone else. My good trading buddy @Gary for example.

The only way I could come up with so far though would require a LLC formation which would then lease the seat, and I believe that the broker would then also require that LLC to be the account holder which has tax implications. That leads to more headache. Does anyone know for sure the answer on sharing a seat? If not, I'll ask my broker to get his opinion (probably will anyway).

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  #24 (permalink)
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Big Mike View Post
I don't think my personal discretionary volume is high enough to warrant leasing a seat right now. But I was trying to come up with a easy way to get around this limitation by sharing the seat lease with someone else. My good trading buddy @Gary for example. The only way I could come up with so far though would require a LLC formation which would then lease the seat, and I believe that the broker would then also require that LLC to be the account holder which has tax implications. That leads to more headache. Does anyone know for sure the answer on sharing a seat? If not, I'll ask my broker to get his opinion (probably will anyway).

Did you get an answer? If so, will you share it with us?

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  #25 (permalink)
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The best and easiest way...

is to form a joint back office agreement with a clearing firm, then purchase the seats you may require. When I was involved in a JBO and the last time I looked at doing it again the capital contribution requirement was $1,000,000. So getting the JBO in place is relatively easy.

Of Course you have to pass membership exams and then purchase or lease seats. Seat market information is posted at all exchanges and you can usually find it on the respective web pages. 18 months or so ago the offer for CBOE was a record $2,500,000. Current offer for CME full membership id $645,000, you can lease for about $2,000 per month. CBOT has 19 leases available the current offer is $1,600 with a sale offer price of $314,000

So an individual with the right knowledge and relationships could get it done on shoestring funding with about $1,500,000. Probably a better idea to "break in" by going to work for someone and learning with their capital while putting away your own cash to purchase a seat.

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  #26 (permalink)
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@wldman, can I borrow some of your shoe strings?

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
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  #27 (permalink)
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Why would you...


Big Mike View Post
@wldman, can I borrow some of your shoe strings?

Mike

want to Mike. Catholic charities is not planning a tag day for you anytime soon, I am sure.

If you had 10 guys each put up $250,000 that would cover the JBO and allow individuals to be fairly well capitalized intraday. The individual seat leases could be pass through as an individual expense. Net monthly expenses per trader could probably be kept under $4,000. Although those lease numbers look really low.

There are typically 21 trading days in a month so the "nut" is $200 bucks a day to break even. If you are a 10 up trader, which is very very small on the floor, you need to net just two or three ticks on a single trade to cover the nut.

I did (do) not mean to over simplify the idea, but looking at floor membership to dodge transaction costs is "correct path" but "wrong mountain" thinking. It follows that if someone is profitable they should have a reasonable shot while pushing the size into the hundreds of contracts. It was typical for the more prolific guys on the floor to make a few million on Tuesday and lose a few million on Wednesday. Under that governing dynamic a guy that is profitable 10 more days than he is not, may make a 30--50 million income...he may also break even. Guys that are not profitable never get to trade that kind of size. I should also say that it has been almost ten years since I've been involved on the floor so maybe things have changed....but I would say that if you where a local and in the top half of traders ability wise you should have been making at least near 7 figures on the floor.

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  #28 (permalink)
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Leasing a seat is a fairly simple process. Contact your broker and they will assist you get set up.

The current NYMEX lease price is around $1000/mo.

Index futures (IOM) lease is $450/mo.

Both will roughly cut trade costs in half.

Membership Pricing

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  #29 (permalink)
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A new site devoted to helping traders look at numbers of leasing:

https://www.seatleaser.com/

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
The following 3 users say Thank You to Big Mike for this post:
 
  #30 (permalink)
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Big Mike View Post
A new site devoted to helping traders look at numbers of leasing:

https://www.seatleaser.com/

Mike

Does anyone know another company. It seem that firm is not around

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