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TSWP


Total Posts: 358
Joined: May 2012
 
Posted: 2017-01-20 19:03
I did some research but I am confused by the various offers and since in the end real-life experience is what matters, I am going to ask here on the forum.

Launching our first US-based hedge fund, we need to find a broker that allow us to trade US Futures and FX Spot, both by hand and by semi-automation initially (for example, if I have an excel sheet and I want to interface it to the broker so that I can get my orders filled at the touch of a button).

Fully automated algorithmic trading will come later, but it will come, so ideally it's best to have a broker that offer us all the options.

If the broker also offer its own front end (possibly no frills), it's good.

What would you guys use for a setup as the one described?

EDIT: Is there a broker you would use above anyone else? Lime? Interactive Brokers?, or do you prefer more complex, self-built solutions with APIs/DMA? Object Trading?

The only thing that counts: can you make money?

TSWP


Total Posts: 358
Joined: May 2012
 
Posted: 2017-01-22 16:06
I am going to add one question: what do you think of mini-prime brokers? Any of you using them? Which ones you like? Cantor, Triad, Converge etc.

The only thing that counts: can you make money?

ronin


Total Posts: 183
Joined: May 2006
 
Posted: 2017-01-22 16:35
IB Institutional does all you want, and it has a front end, but it's expensive.

I don't think Lime even does fx or futures. Afaik they do equities and options.

Never used Object or any of the others.

In London you have Linear, but they don't do fx and there is no front end.

Just do it the old-fashioned way - send them all an email saying "we want to trade this much of those markets - what can you do for us and how much will it cost".

"People say nothing's impossible, but I do nothing every day" --Winnie The Pooh

contango_and_cash


Total Posts: 62
Joined: Sep 2015
 
Posted: 2017-01-22 17:31
But I thought IB just stopped doing FX futures? Is that just at the retail level?

I am exploring TD-Ameritrade/Think or swim for this reason.

Luciender


Total Posts: 73
Joined: Aug 2008
 
Posted: 2017-01-22 17:47
As far as i know, they stopped doing margined FX spot for retail clients in the USA (for regulatory reasons). No change for professionals/ECPs or non-u.s. residents, or futures.

TSWP


Total Posts: 358
Joined: May 2012
 
Posted: 2017-01-22 23:54
>I am exploring TD-Ameritrade/Think or swim for this reason.


I have tested ThinkorSwim for one year, this year, knowing that it was a retail platform for retail traders and I can only say... it's ok if you're a retail trader and you want to play a hobby in your spare time.

@ Ronin, thanks for the tip - I will look into IB Institutional.

The only thing that counts: can you make money?

goldorak


Total Posts: 979
Joined: Nov 2004
 
Posted: 2017-01-23 08:19
IB Institutional? Is it "Interactive Brokers" we are talking about?

It is the exact same as IB for retail traders. Same interface, same connectivity, same helpdesk, same API, same pricing. Expensive front-end???

@TSWP: Excel? seriously? Cry


If you are not living on the edge you are taking up too much space.

a路径积分


Total Posts: 77
Joined: Dec 2014
 
Posted: 2017-01-23 08:27
It depends on what the main gaps you're trying to plug are.

If multi-prime is a requirement, there's a few boutiques like Conifer - now Cowen(?) - unfortunately they are primarily equities IIRC - that provide that.

If capital introductions are important to you, I remember there was a group of guys formerly from Newedge who are good at that.

If an off-the-shelf reporting integrated to your portfolio is important, IB is good at that. I don't share goldorak's sentiment on IB, I've seen good guys pick up from IB. I've never seen a good reporting stack come out of a fund admin.

If SMAs are important to you, I would start with reading the temperature of your potential SMA investors on different PBs first.

If bank LPs are important to you, there's only a few obvious choices.

If you want broker-side low touch risk, there's only a few obvious choices.

If you're pushing a lot of volume, there's like only 4-5 names I can think of.

If low fees are important to you, I would also consider going the extra mile to split the FX and futures market access.

If you're not writing your own execution, I personally prefer a broker-neutral front end. There's no broker I know of that has a reasonable product here because that's not their specialization and the space has remained quite undifferentiated over the years. Moreover, you're always going to have surprises over the years about what sort of market access you can get from your broker when you try to expand and the last thing you want is to be locked in.

When you go into fully automated trading, the most important thing in my mind are the institutional frictions because there are a lot of moving pieces that have to be synced between your PB and you to go full automation. It's low value-add when you have to deal with 1 sales guy for futures fees, 2 other guys for FX sales, 1 mailing list and 2 guys to set up daily drops, 2 guys for risk, 1 guy for electronic access and permissions, 2 guys and 1 mailing list for trading contacts. It gets worse if the guys at your PB are completely out of sync with each other and leave the onus on you to be their middle manager and coordinator. Or if they take 2 months to shove you past their risk and compliance because their head of risk works in a different office from your sales guy and has a 2 week wait time to hop on a call. I urge you search for non-bank PBs/FCMs if you can start with that.

NeroTulip


Total Posts: 992
Joined: May 2004
 
Posted: 2017-01-23 08:52
If you want to send your orders to IB from Excel, it can be done. It's not the most elegant thing in the world, but if you have a small number of simple orders and want to automate quickly, that can be an option. They have more robust Java and C++ APIs too, if you want to go down that route in the future.

"Earth: some bacteria and basic life forms, no sign of intelligent life" (Message from a type III civilization probe sent to the solar system circa 2016)

ronin


Total Posts: 183
Joined: May 2006
 
Posted: 2017-01-23 10:14
> Expensive front-end???

I meant IB is expensive, not their front end.



"People say nothing's impossible, but I do nothing every day" --Winnie The Pooh

NeroTulip


Total Posts: 992
Joined: May 2004
 
Posted: 2017-01-23 10:25
I find IB pretty competitive for US futures, much less so for European/Asian markets.

"Earth: some bacteria and basic life forms, no sign of intelligent life" (Message from a type III civilization probe sent to the solar system circa 2016)

TSWP


Total Posts: 358
Joined: May 2012
 
Posted: 2017-01-23 10:35
All right guys, thank you all for the input.

a路径积分 thank you for your EXCEPTIONALLY detailed input, very helpful and very appreciated you took your time to write this. Thank you.

goldorak, excel was just an example.
I have a C# algorithmic trading code under development for low-to-mid freq, it's not ready and will be rolled out only in a year or two.
At the moment I have to input orders manually, which is tedious.
If the solutions that NeroTulip explained are available in IB, that could be a path: read orders from a file and send them directly to IB without having to type them in.

The only thing that counts: can you make money?

TSWP


Total Posts: 358
Joined: May 2012
 
Posted: 2017-01-23 12:53
Has anyone tried Market Factory for FX?

The only thing that counts: can you make money?

contango_and_cash


Total Posts: 62
Joined: Sep 2015
 
Posted: 2017-01-23 13:57
@tswp

Who are you using for fx future data?

I have been using one provider for broader futures but find they fall short for currencies.

goldorak


Total Posts: 979
Joined: Nov 2004
 
Posted: 2017-01-23 15:21
@a....

> I don't share goldorak's sentiment on IB, I've seen good guys pick up from IB.

I did not give any sentiment on IB. I just said that IB "Institutional" is the exact same service as "IB retail". I started using IB 16 years ago with an account number below 50000.

If you are not living on the edge you are taking up too much space.

TSWP


Total Posts: 358
Joined: May 2012
 
Posted: 2017-01-23 17:38
golkdorak, so you're saying this:
https://www.interactivebrokers.com/en/index.php?f=930

is the same as this?
https://www.interactivebrokers.com/en/home.php

Can you clarify? It seems IB says that "Interactive Brokers gives institutional clients the flexibility to execute and/or clear trades on our platform or with numerous third-party brokers."

That does not seem to be the case with the retail version, or is it the same?
(I am confused.)

EDIT: also it seems to have some additional services, on that page.

The only thing that counts: can you make money?

agentq


Total Posts: 24
Joined: Jul 2008
 
Posted: 2017-01-23 21:30
I looked at market factory but they do charge a hefty monthly fee for just aggregating across multiple brokers. Unless you have a very specific legal/regulatory reason, something like FXAll should suffice? Or even bbg fx go, for that matter

goldorak


Total Posts: 979
Joined: Nov 2004
 
Posted: 2017-01-24 05:31
The exact same. As I said: "It is the exact same as IB for retail traders. Same interface, same connectivity, same helpdesk, same API, same pricing."

Anyway if you open an account with them for your Fund, it will be an institutional account, but it is just the name. You don't need to wonder too much about the details. If you need services, you opt in.



If you are not living on the edge you are taking up too much space.

TSWP


Total Posts: 358
Joined: May 2012
 
Posted: 2017-01-24 08:59
OK, good to know, thank you.

The only thing that counts: can you make money?

cquand


Total Posts: 91
Joined: Sep 2007
 
Posted: 2017-01-26 12:23
If you are an institutional client, you can actually talk to human being, which will take your query seriously.

So it is slightly better, but let's be clear although IB has a very decent offer in term of systems, their philosophy is DIY. That's their business model.

It is the best alternative to start up.

Personally for me, the weakness is margin requirement: they do not have ability to understand that say SPX versus NDX should not get teh maximum margin as they do not use a VaR approach.


sigma


Total Posts: 105
Joined: Mar 2009
 
Posted: 2017-01-26 22:09
For IB you can request the portfolio margin rules https://www.interactivebrokers.com/en/index.php?f=marginnew&p=overview4

In my experience for balanced long-short exposures it allows to have 1:4 leverage without stretching.

This is a risk-based system and it incorporates some netting for equity exposures. It is not available for positions in futures and futures options though.

a路径积分


Total Posts: 77
Joined: Dec 2014
 
Posted: 2017-01-29 08:20
@TSWP

No problem. What you're doing takes a lot of courage and mettle, it's my blessing to be able to extend some help.

I agree with agentq, if you are just doing this in low-med freq on the majors, you should just pick one of the top 4 volume ECNs. They have anything from algo order types, GUIs, access over public internet and free live data over FIX sessions and are more supportive of sleeper accounts. This way you don't end up burning a monthly license fee before you even get started. The setup time takes 1-12 weeks depending on which ECN this is, and you don't need a PB to start connecting, so I'd get the ball rolling already if you can.

This is for later on, but one suggestion I have is that after you've picked your favorite broker, tell your 2nd favorite the sincere reasons why you went with the other broker, but that you want to schedule a quarterly callback in case you start needing a secondary counterparty. This also gives you some backup leverage in case the broker that you went with guts you on fees later on or has some staffing shakeup that leaves you with incompetent contacts.

Also, the space is very interconnected. If you asked your most-trusted auditor, attorney, or ECN salesperson for recommendations to PBs, I can guarantee you that they will easily set you up with 1-2 new contacts, and at least you get quality vetting through this, which is better than hearing recommendations from me.

TSWP


Total Posts: 358
Joined: May 2012
 
Posted: 2017-01-29 11:41
a路径积分 and agentq thanks for the solid input, I'll take advantage of it when we'll start trading FX (initially we'll trade only Futures, we have a plan on how to market the various ways we play different markets through dedicated investment programs and this will evolve as we learn to know better our clients and their need, a路径积分: your previous comment about SMAs rang a bell in that sense).

cquand, thanks for the clarification.

The only thing that counts: can you make money?

a路径积分


Total Posts: 77
Joined: Dec 2014
 
Posted: 2017-01-29 14:40
OK if you are starting out with futures and 1-2 years away from automation...

> Is there a broker you would use above anyone else? Lime? Interactive Brokers?, or do you prefer more complex, self-built solutions with APIs/DMA? Object Trading?

Is this CME, ICE, or both? For CME, I'd recommend against unnecessarily bumping yourself into the highest tier of non-display fees on your MDLA because of your platform choice and DMA setup. ICE is less discriminatory with this.

TSWP


Total Posts: 358
Joined: May 2012
 
Posted: 2017-01-29 15:09
>Is this CME, ICE, or both?


Most likely we'll start with CME.

The only thing that counts: can you make money?
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