Cutting off the head will kill the beast….I use that in an effort to express what has been happening on the trading floor to paper brokers. Paper brokers are those who fill customer orders for a living. I am one such person and while I take pride in my work, I am growing increasingly frustrated with the treatment I receive from the exchange. And things continue to move in the direction toward the elimination of floor brokers.
I recently was fined $500.00. My crime? Not placing a mark on my trading pad under the heading of clearing house, even though the order tickets all included the appropriate account and clearing house information and trades were submitted in timely fashion and in the appropriate manner. I cannot appeal this, as that rule has been abolished.
From conversations with compliance I subsequently learned that the CFTC has been “cracking down” and not enough fines have been levied. To me however, it’s more like a cop pulling over a speeder going two miles an hour over the posted limit to please some politician and enhance revenues. There are much bigger fish to fry.
A few other paper brokers, (not local traders) were recently fined for not having a full time stamp following an order’s execution. Two time stamps are required, one when order arrives, or is taken, and following any change,s or once filled. The offender seemed to not notice that the time stamps were only partially legible. Perhaps he was in a rush and the machine didn’t work properly, but then it is the exchange who maintains the time stamp machine’s integrity. That fine also cannot be appealed, as the appeal process has been halted.
Paper brokers have recently incurred increased fees from their Clearing houses, as a surcharge for doing business. A Clearing House guarantees, or stands behind the solvency of the broker. Many firms now charge a per contract fee, with a monthly minimum of $1,000.00.
In the past few years I have found it necessary to let go two clerks due to the lack of revenue and now operate my business solo. Revenues have been reduced as brokerage fees have dropped in an effort to remain competitive with electronic markets. And the excchange charges fees for booth space rental, and well suffice to say that costs continue to grow and revenues go down. All this places a strain on small businessmen such as myself. Many have left the business, others retired when the exchange went public.
If you want electronic trading, just kill the paper broker and there you have it. Although I tend to believe its a safeguard to have an experienced professional to oversee your orders . Just ask any of my customers if I provide them with better fills on occasion, market information that helps them trade, or saved them from making a mistake.
Anyway, needed to vent. Have a nice weekend, Jurgens
