On that note, this is very interesting thread, OP may have not exactly asked this but I also have few questions.

Do I count as a broker?

In India one of the good things is that you operate through exchange account which is called demat which is linked to your bank a/c. Irrespective of your broker, your demat is always with exchange).

...its possible for you to trade for a client, you just take trading side control of their trading account.... I assume it's what these prop firms do when they hire a person they deem suitable for them to do the job, but just on larger scale.

what makes a trader in US a professional trader in the eyes of the exchange/controlling authority ?

Several different questions, and I don't know for sure how well I can answer them. I'll respond based on what I know about US practice. I don't know anything outside of the US, even as close as Canada, much less India .



I have no idea. This would be an India-specific determination, I think. I am not sure what that arrangement would be in the US. I'm not sure there is one like that here.



In the US, you do not ever have an account with the exchange. You have an account with your broker, and you execute all your trades through them. They send them on to the exchange. On the exchange, your order to buy is matched to someone else's order to sell, and the result goes back to your broker and, electronically, to you.

There is never a direct connection with your bank. You may have money sent to your bank by your broker, or to the broker by them. But they will always be distinct.



I would say no. The prop firm is just a company that trades its own capital. It has to have accounts with one or more broker, and its trades for those accounts go through the broker, just like anyone else's. The traders that it funds are traders that it has hired under contract to trade its money, and the firm splits the profits, if any, with the trader (trader gets 80%, firm 20%, at least generally). There is no client money being traded. We may have a problem here with terminology, but I don't think that what you describe in terms of trading client money has any resemblance to the prop firm arrangements.

I'm not sure I understood the structure of the way it is organized in India, but from your description, it does not appear that it is too similar. Which is kind of surprising, but it may just be that I haven't understood the description, and the terms used are apparently a little different as well. There may be real differences here, or it may just be the terminology.



Speaking only about the CME (the main commodity exchange), the definitions can be a little involved and hard to figure out, but essentially the issue has been that traders that do not trade only their own money for their own benefit are "professional" in the sense that is relevant to whether they have to pay the full "professional" fees for using exchange data. There are other rules, which I always forget -- and I don't think I'm going to go look them up right now, sorry . The difference between the pro and non-pro fees you pay can get fairly large, depending on how many of the four CME "exchanges" you are going to trade on.

(Edit: I just read this again, and I realized that it may not be clear that, contrary to what a person might expect, the "professional" fees are worse -- considerably higher, many times higher -- than the regular, non-professional fees. Why is this? Don't we usually think that "the professionals" get everything better than the rest of us? Well, yes, we do, but in the case of the Chicago Mercantile Exchange (CME), professionals just have more money and depend on the data more, and so can be squeezed harder to pay for the trade data that they need for their business. This is why everyone who can manage it attempts to be sure that they are not considered "professional" by the exchange. It's not an honor, it's a bigger bill. You are required to self-declare whether you are a professional or not, and so of course everyone says, "No, I'm not," but sometimes you can't get away with that, as in when you are a person who is paid by a firm to trade -- that's pretty obviously a professional situation, unfortunately for you. )

But I don't think this is exactly what you are talking about. There are other senses of "professional" -- for example, for US tax purposes -- but "I am not a tax advisor, please consult your tax professional," as I always say. Those two meanings of "professional" -- exchange, and the tax code -- are about it, as far as I'm aware. Other exchanges probably have other criteria, and it generally will involve fees in one way or another. Sometimes, in some contexts, it may be actually better to be a "pro," contrary to the CME's practice. On CME, your data costs you more.

I think this is about all I can say about what you wrote. I may be wrong, but I think there are significant differences in how business is done in the two countries. Or it may just be my lack of familiarity with Indian practice. I'm just not familiar with how things are done in India, so recognizing what is similar and what is different is a little difficult, sorry.

Bob.