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  • Writer's pictureRakshith B B

Economic Proposal: Joining a Proprietary Trading Floor vs. Private Office Setup



**Objective:** To demonstrate the financial benefits of joining a Proprietary Trading Floor (PTF) compared to the establishment of a private proprietary trading office.


**Introduction:**

Setting up a private proprietary trading office involves significant initial investments and ongoing expenses. We aim to highlight why it is economically advantageous to consider joining a PTF, where traders can access resources and amenities at a fraction of the cost.


**Key Financial Considerations:**


1. **Fully Refundable Deposit:** PTFs offer traders a Grade A office space for the initial year against a fully refundable Membership fee of Rs. 10,00,000. This fact alone significantly reduces the initial financial burden compared to a private office setup.


**Illustration:**


**Private Office Setup:**

- Rental Advance: Rs. 200,000

- Furniture: Rs. 300,000

- Computer: Rs. 75,000

- Air Conditioner: Rs. 40,000

- Printer: Rs. 15,000

- UPS: Rs. 20,000

- Security Camera: Rs. 20,000

- Total One-time Investment: Rs. 670,000

- Monthly Expenses (Rent, Utilities, Personnel): Rs. 35,000 x 12 = Rs. 420,000

- Annual Operational Costs: Rs. 420,000

- Depreciation Costs: Over time, furniture and equipment depreciate, and these costs cannot be recovered.


**PTF Membership:**

- Fully Refundable Deposit: Rs. 10,00,000

- Monthly Expenses (Utilities, Amenities): Included in the deposit

- Total Annual Investment: Rs. 10,00,000 (Fully refundable after the initial year)


**Benefits of Joining a PTF:**


1. **Cost Savings:** The fully refundable Membership fee of Rs. 10,00,000 in a PTF essentially provides traders with a Grade A office space for free in the initial year, resulting in immediate cost savings.


2. **Resource Access:** PTFs provide traders with access to advanced trading software, research, market data, and a professional environment, all without incurring additional expenses. This translates into substantial savings in software and data subscription costs.


3. **Risk Mitigation:** PTFs often implement robust risk management systems, reducing the chances of large trading losses. This risk mitigation can save traders from substantial financial setbacks.


4. **Ethical and Regulatory Benefits:** Joining a regulated PTF ensures compliance with ethical trading practices and regulatory standards, reducing legal and reputational risks.


**Conclusion:**

In conclusion, joining a PTF offers undeniable economic advantages over setting up a private proprietary trading office. Traders can benefit from a Grade A office space at minimal initial cost, avoid depreciation expenses, and share ongoing operational costs. Additionally, access to resources and a professional environment further enhances the value proposition. Therefore, from both a financial and ethical standpoint, joining a PTF is the economically prudent choice for traders seeking to maximize their profitability and minimize risk, all while having their expenses and investments backed by a fully refundable deposit.

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