proprietary-trading

The first model of business available to an invester-turned-broker is PRO Trading - an excellent way to reduce costs if you are a large investor/trader working through a broker especially if you are active only in the major market segments like NSE, NFO & BSE. Your trades get executed in micro seconds and no congestion with brokers during wild market movements (many times as a client you are unable to get out easily during crashes or get in during upswings). 

But as a broker you have to manage the daily processes yourself. But its not that complicated - the exchange payins and payouts  is your net inflow or outflow and your DP holding minus your sale positions plus your purchase positions is your stock. Of course you would want to segregate your investments and acount for your long term and short term profits and losses - all this and more can be managed with SharePro with ease.

Beyond this, you can go on to create jobbing/arbitrage desks and have a profit sharing arrangement with the jobbers. 

You could also go into retail broking business where it starts to become complicated - but still easy if you have staff and a backoffice system like SharePro.

[In the last few years we are seeing a trend of retail brokers closing their retail operations and focussing only on PRO business where the compliance requirement is minimal. Institutional Investors would usually avoid your firm if you trade in the PRO account unless you have necessary safeguards in place.] 

Integrated with Retail
Integrates with your retail broking operations seamlessly and works great for brokers who already use SharePro as their broking backoffice solution at no extra cost i.e. a single system handles the operations of both business model.

 

Multi-segment
Supports multiple segments of the Indian Markets

  • PRO Trading in all market segments
  • Arbitrage operations between NSE Equities and Derivatives
  • Arbitrage operations between BSE Equities and Derivatives

 

SharePro Components required

Click on the links provided to get a more in-depth view of each component:

  • Only the SharePro Desktop is required.
  • SharePro CRM, ssScheduler & SharePro AIR is not required.
  • Live RMS can be used to minimize Market Risk when the number of arbitrage desks become unmanageable
Alpha Members
The alpha memberships provided by the different exchanges also support a handful of clients to accomodate family members. SharePro handles these automatically and contract notes need to be printed and physically handed over to the clients. Emailing of digital contracts would require the ssScheduler component. Web logins for clients would require the SharePro CRM component and mobile access for your clients would require SharePro AIR
Standalone / Isolated Operations
Instead of integrating with the  Retail business SharePro for Jobbing / Arbitrage business can easily be maintained separately as a stand alone system which is preferred by most brokers, the idea being to keep the operations of arbitrage and retail isolated from each other.
Jobberwise Profits
Monthly Jobber-wise profit/loss statements can be taken out which considers besides the regular charges like STT, Stamp Duty, Transaction Charges, etc.(on the basis of jobber level netting), RMS charges, Demat Charges and even Interest on the daily fund utilization. 
Auto Corporate Actions
Handle dividends, splits, bonus and other corporate actions simply and effect the portfolios accordingly.
All SharePro Features
All standard SharePro Desktop features are available including DP instruction file generation, BRS reconciliation, ECS transfers/Cheque printing for recurring payments,  etc. For more details of retail broking click here.

Does SharePro have the necessary “work-arounds” to handle PRO trades ?

SharePro doesn’t need a “work-around” to handle PRO trades. Right from the start the true nature of PRO is maintained from the trade process upto the finalization of accounts.

  • No brokerage is charged for the PRO trades – its like charging yourself and paying service tax !
  • No contracts are generated for PRO – you dont need to enter into a contract with yourself !
  • Equity Delivery Positions are netted across multiple jobbers
  • FO Open Positions are also netted across multiple jobbers
  • Relevant Stamp Duties are applied
  • Closing Stock valuations with different formula
  • Profit/Loss by Purchase and Sale is also available in case you follow that method

Do the PRO trades reflect in the Ledger like Client trades ?

While a client’s trades does not affect your balance sheet, a PRO trade does have an impact on your balance sheet.

In SharePro  the PRO account does not have a ledger (the way you see a Client’s ledger), instead SharePro analyzes each transaction and provides a specific and detailed accounting treatment for each transaction – thereby segregating :

  1. the trading (intraday) profits/losses
  2. the short term gains
  3. the long term gains
  4. the investment profits/losses

[While segregation of Investments requires a manual intervention, the rest is segregated automatically]

And of course the notional profits/losses with respect to the open long and short positions.