Dorman Trading financial statement 2016

Why would a FMC have off balance sheet holdings?

 

Doesn't Wedbush also act as a futures broker with their own customers (not introduced)?

 

What holdings would that be that they can convert? I have nothing good or bad to say about Dorman. We don't do business with them. My only comment I made was that vs other FCMs, they are on the small side based on Net Capital. Most smaller FCMs prefer Day-traders becasue the overnight requirement of 8% of customer margin becomes hurdle.

 

They not "off balance sheet"... on the balance sheet but in some other form than "cash"

 

Yes but that is just being an FCM doing business with the public. I guess it is not incorrect to call them an FCM and a Broker.

 

That's the point, there is little else on the balance sheet to convert relative to customer funds.

 

If I sound ignorant, it's because I am. They've got "excess capital above required net capital". It's not all in cash... like in securities or such. If they needed cash, couldn't they convert some of that capital to cash as needed? Just like a person... maybe needs some cash and can sell some stock?

 

Dorman is also in that pdf, with smaller net capital than the average as you pointed out. Of course there are some colossal banks in the list, but still makes me a little concerned.

 

I think that's the same model Dorman have.

 

Dorman's ratio of net capital vs required net capital is ~5:1. Some on the list are < 2:1. A couple are <1:1. I thought I was comfortable with Dorman being "5:1" when I moved my account there. (It had been at Wedbush through an IB, but all of the IB's accounts were forced to leave Wedbush... or at least so they said.)