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Notes From a Cyber Trader


Of Note:

The bread and butter is in the commissions.

So start churning those accounts.

Is it any wonder many stocks will run up in a day only to see the share price return to its opening price or close to it.

The stockholders' portfolio may not change much but those commissions get put through.

The argument being the client's fund isn't gutted so who cares if brokers put through some commissions and keeps the trading profits. (At the end of the day the client only sees the closing price good or bad and is unaware someone took the asset out for a joy ride.
Don't think for a moment that all those stocks sitting in mutual funds are safely tucked away in a vault somewhere.)

Maybe there should be a law that says if you're churning clients' stocks they should get part of the commission proceeds because you are using their stocks.

At least banks pay you interest (piddly as it is) for using your money.  It doesn't just sit in the bank idling. Its used 24 hours a day and should you want your cash, you're getting someone else's deposit because your cash was spent. Say doesn't this sound like a ponzi scheme? But I digress. Lets stick to the subject at hand - churning ...

At the end of the day, it's only called one thing - REVENUE


Taking a page from Raymond James, Canaccord expands

The Globe and Mail
June 30, 2006

To understand what Canaccord Capital Inc. is up to these days, it helps to understand the way they do business at Raymond James Ltd.

The Florida-based investment dealer is home to a large retail sales force. There are 1,382 stockbrokers in what you and I would consider a traditional role: Their business card says Raymond James, and they invest for clients out of company-owned offices.

But Raymond James also has a huge business serving as the back office for 3,427 stockbrokers, whom the dealer calls "independent contractors." These financial advisers likely have their own names on their business cards, and their office doors.

Each of these independent advisers generated an average of $330,000 (U.S.) in commissions last year for Raymond James. This consistent fee income, drawn from client assets that total $196-billion, is a big reason the dealer posted record revenue and profit in 2008. In total, all of Raymond James' stockbrokers contributed 61 per cent of the firm's total revenues last year, and the dealer's stock actually went up, at a time when bigger, better-known Wall Street banks were going bust.

Now, here's the Canaccord connection: The Canadian firm makes no bones about wanting to expand its retail presence. However, it's difficult to recruit from rivals.

Yet Canaccord has a maverick corporate culture and a focus on the growth stocks that appeal to a certain breed of financial adviser. That same type of stockbroker might also jump at an opportunity to control their business. So why not just steal a page from the guys in Florida by hiring a couple of Raymond James veterans and rolling out the independent contractor concept?

Canaccord landed George Karkoulas this week as a senior vice-president and head of its new "principal-agent retail distribution initiative," after he spent the past seven years successfully building this division for Raymond James in Canada. Former Raymond James Canada CEO Peter Bailey, another veteran of the retail business, has also signed on as a consultant.

It's part of a larger push to expand both the size and the quality of the retail arm at Canaccord under head of private client services John Rothwell, who joined last year. In an internal note to colleagues, Mr. Rothwell explained: "Our operational build-out in support of George's business will leverage our independence, infrastructure and operational strengths and increase the scope of our recruiting offering."

Right now, Canaccord has 338 teams of stockbrokers, calling the shots on $9.2-billion (Canadian) of client assets. This retail franchise accounted for a third of the dealer's total revenue last year. Adding more advisers to this team, in any form, can only improve the dealer's financial performance.



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