Its a real tough market, for daytrading shops. Their clients tend to be fickle, willing to move from one to the next, depending on who has the latest and greatest mousetrap or other technology. Margins are low, costs relatively high. If your technology even hiccups you are out of business.
Whats nice for us is that about 70% of our business comes from 1) long term investors, clients we've had for years, individuals who wonder is SOES is what sea ships use to communicate with, 2) money management which, while it can be fickle, is more a niche play and 3) institutions, large accounts (nothing too big) but the type of client that might buy 20, 30k of stock at a clip. At 3 cents a share (our institutional rate and a big discount to the rest of the market at 6cents, given the quality of the fills) we do quite nicely there. The services and our niche with active daytraders and position traders is a nice part of our business, though.
Being in the industry isnt cheap. There are many components to running a brokerage firm etc. Salary, rent, NASD and other regulatory fees, technology expenses..etc. and doing tickets for $20, with clearing costs of more than half that and brokerage fees(soes, snet,etc.) is the quickest way for some of these daytrading firms to go bellyup.
Hopefully, their clients weren't disadvantages or got stuck in some ugly positions. Given the volatility recently, I am sure many didnt sleep well. But whatever the case, if any of them are reading, get to cash and then get your cash out.
Regards,
steve@yamner.com |
