Why is C2 so greedy?

C2
82

(1) NFA saying something is not a “proof” of anything.

(2) The NFA conjecture (or lemma, most definitely not a “theorem”) does not say what you are implying.

Note the “necessarily” in their statement. [This sort of makes their statement trivially true.] They do not say that past results can not be indicative of future results. It is not necessarily that. If I claim that “a system with at least 275 trades and an equity curve that fits a linear regression line with 95% confidence” is an indication of future results, it may or may not be a true statement, but in itself doesn’t contradict theirs.

So yes, a developer indeed can prove that they are consistent. (For some definition of consistency.) They can prove that they are profitable. NFA has no business here. Will NFA fine me if I calculate a regression model? Or they will “prove” that it is incorrect?

83

Not sure this is the best idea. At least for investors. I would think you would see many more scams if it was that much cheaper to list. Maybe C2 would take more of the fees but the scammers would still make something, and in other countries a couple bucks goes a much longer way and is still worth the effort to scam, especially if it is cheaper up front to do so.

85

I think you are right that it could go that way. You would have to implement one account per person by using some sort of validation such as passport of SSN etc. I know it is funny that I would say that since I have two accounts, but I really do think C2 would be better off overall if it did implement one account per person. I think they certainly need to add a stress test like David mentioned too. Going cheap for new trade leaders alone wouldn’t be good because it would just encourage scammers. It would have to be done in tandem with other upgrades. Basically if you help prevent scammers then I think you can go ahead and reduce barriers to entry.

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86

There is a lot of good suggestion on how c2 can change. But none of us really know the financials of c2. They had some info disclosed during their fund raising a yr ago. I don’t know what the financial look like now.

Let say they have 3 total streams of clients. Subscribers, developers listing fee and “clones” website fees.

They get fees from each of these pools. From what I remember during their last investors meeting, that the subscriber pool is the highest revenue. They get 100% of the autotrading fee. Which they already raise these fee a yr ago.

Now they are raise the fees they get from the developers pool.

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87

Why did you do this quickly, and not informed in advance? Tariffs would raise on September 1. And then we raise tomorrow.

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88

Guys,

A lot of suggestion to C2 now and then but I think C2 should know the money pay C2 alive is from subscribers.

The best way to get more subscribers and good learders coming to C2 in my opinion:

#1: Instead of increasing fees to leaders C2 should protect subscribers by limited DD of leaders. Ex, shut down any strategy DD >10% out of C2.

#2. Charge subscribers performance fee (30%) on water mark and pay leaders (20%).

All wins win and happiness if we have good leaders supporting C2 by good strategies and making subscribers satisfied :slight_smile:

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89

anything performance based would require c2 to be RIA and hedge fund standards. so thats a no.

just look at this as a tariff hike. 10% tax on the developer, 20% price hike on the subscribers.

90

Hey PM dude, the truth is that your marketing tricks are all exposed you know won’t get more subscribers and, therefore, you are making an excuse to run away after the Aug subscription renewals. Please save peoples time on this forum and just leave C2 for goodness sake.

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91

It’s a simple case of " supply and demand". Unless there is a competitor (s) to C2, they can demand whatever they like. It’s a case of LIKE IT or LUMP IT !

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92

I don’t believe this.

C2 is a platform, connecting developers to subscribers.

Nothing to do with a hedge fund (other than the inexplicable slogan they float.)

Why can’t a developer post a message like “Hey, Joe, I am so confident that I will make money next month, that if I don’t, I refund you $7.62” This is not “performance based”, this is not a violation of the “past performance” crap, for that matter this is nothing to do with C2. They are just a conduit, like any other social media site.

IANAL, and this is not full fledged “plan”, but I don’t believe that one can summarily declare that (paraphrasing) C2 has not way to filter out scammers and fly by night operators. All what these poor guy can do, because of the laws that tie their hands to increase prices.

I just don’t believe this.

On this note (the increase)

Just for accuracy: raising the price from a 30% cut to 50% is a 66% hike (for the developer) and from $99 to $299 is 200% (for the subscribers.) [Without even taking into account the functionality cut.]

93

Could someone please post to this forum the email you received in full indicating the increase in the percentage that C2 keeps from the developers and the reasons for the increase? I never received any such email. Thanks!

Jim

94

Yeah that’s not possible. Even the best strategies will have a DD >10%. Unless you are a HFT right next to an exchange.

Would be a barren wasteland of nothing here…

95

Here is the full email:

Dear Charles Tines:

Today I have unpleasant news. Collective2 needs to increase the percentage it charges Trade Leaders when a strategy subscription is purchased by a customer.

As you know, the current fee is 30%. That has been the percentage for over a decade. The new fee, effective for transactions beginning August 7, 2018, will be as follows:

For subscriptions charged on or after August 7, 2018
Trades-Own-Strategy (TOS) strategies 40%
Regular Strategies 50%

  • Subscription fees charged before August 7, and not yet remitted to you, will be charged old fees

We will not be changing the monthly Trade Leader fees, and have no plans to do so. This affects only when a subscriber pays you for a monthly subscription.

Still, there is no way to sugar-coat this, no corporate bullshit I can blow to make this more palatable. The simple truth is that the economics of Collective2’s business do not work without this price change. If Collective2 is to remain alive and viable, we must change these fees.

Why is this necessary?

Because Collective2 is currently losing money. It’s that simple.

I know it’s not typical for a privately-owned company to share financial data, but I think it’s worth sharing the following.

The February market crash decimated Collective2’s customer base. Many subscribers lost money following strategies that were over-leveraged, and were betting on continued low volatility. This hurt subscribers, but it also hurt C2’s revenue. We’ve been fighting for several months to regain lost ground.

On the cost side of the equation, the math is equally difficult. To be blunt, the operating costs of running Collective2 are high. Just a few examples: we never charge our users for exchange-data fees. C2’s own cost for licensing various exchange data is a quarter of a million dollars each year. In the meantime, the regulatory burden on financial firms such as Collective continues to grow, year by year, regardless of which political party is in office, or what their policies ostensibly are. Legal fees and compliance costs are a steady, large, inevitable, expense. Infrastructure costs — hosting, security, redundancy — are large and rising.

I tell you these things not to make excuses. Ultimately, a business owner is responsible to make his company’s economics “work.” In Collective2’s case, they currently do not. I therefore need to make changes.

What do you need to do?

There is no action you need to take. The price change will be applied automatically, to new subscription transactions that occur on August 7 or later. (Previous subscriptions already paid by customers are not affected.) If you are not TOS-Certified, and want to benefit from the lower fee structure that TOS offers, please consider TOS Certification. See the postscript at the bottom of this email for more information.

Conclusion

I know this isn’t welcome news for you or for Collective2. But C2 has survived for over 17 years , in many economic, business, and regulatory climates. By making this pricing change, and by making other changes in our operations behind the scenes, including reductions in pay and head count, we will be able to insure that Collective2 survives for many years to come. We will continue to fight every day to build a great, strong, stable platform that helps traders and strategy developers around the world.

Sincerely,

Matthew Klein
CEO
Collective2 LLC

P.S. Now, more than ever, becoming “TOS-Certified” brings benefits. You can read more about TOS Certification here. We are also holding a special live webinar on Wednesday, August 8, 2018 at 1:00 PM Eastern time (New York time) to discuss how to become TOS Certified. You can register for the webinar here.

96

Time to be constructive. So, in the spirit of finding a good solution together, below is my suggestion to @MatthewKlein …

(Step 1) Continue with current 40% (TOS) and 50% (standard) fees for Trade Leaders.

(Step 2) Then, any strategy which continues for 6 months, based on rules (below) receives a rebate of 5% (retrospective, and there-on), and a strategy which runs for a full 12 months receives a 10% rebate (retrospective, and there-on).

Effectively, these higher ‘quality’ strategies (which deserve to be in the pool of ‘distributed hedge funds’ label), would then be paying a fair 30% rate, as they are valuable contributors to the betterment of C2, and investors.

The rules for qualifying for both rebates can be worked on (this is what this forum could provide). At the very minimum however, the rules for qualifying rebates should be…

(1) Strategies must be profitable, and return above the S&P500 benchmark.

(2) Strategies must not use leverage above 2x for stocks, and reasonable max ‘x’ times for forex and futures.

(3) DD must not have exceeded 10% at any point.

If, after the rebate, a trade leaders’ strategy breaks said rules, the commission base reverts back to 40%/50% for that particular strategy (into the future).

I believe this is do-able, and would encourage better strategies from good-intentioned developers, which is good for everyone long term, inc C2, investors and TL’s.

97

Thanks for posting this Charles!

Now I see that there also is a TOS webinar tomorrow that I wasn’t aware of.

Jim

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98

It seems crazy to me that performance fees are not allowed, but the SEC is pretty strict on performance fees. Perhaps there could be some argument made that this is just an email newsletter/trade copy service not management so the performance fee isn’t even an issue, but that may be a tough argument in court. Anyways here is a quote and relevant blog post about why performance fees are so highly regulated and how.

“…the key point is that a registered investment adviser that wants to charge performance-based fees to its “retail” investor clients can only do so if they are “Qualified Clients”. And of course, Series 6 or Series 7 “advisors” under a broker-dealer are not permitted to charge performance-based (or any advisory) fees at all, as they can only be compensated for brokerage services (unless they become a “hybrid” adviser and separately join or become an RIA as well).” Just as a note “Qualified Clients” is a term referring to people with net worths over $2.1 million, excluding their personal residence.

99

@DogZebra_Investing,

There are many profitable strategies (age >6 months) DD<10% here on C2.

100

In response to the C2’s recent price move, I am increasing the sub fee from $159 to $239. The extra money subscribers paid will transfer to C2, not me.

The price increase will be effective on 8/12/18. Any current subscribers and new subscribers joined before 8/12/18 will enjoy the locked price of $159 for 12 months. After 8/12/18, all new subscribers including who previously subscribed will pay $239.

WaveRunner 4 is and will continue to be the best system on C2.

101

i was replying to someone suggesting charging a fee based on “performance” that is a FINRA/SEC regulated fee structure. C2 is a subscription service, NOT asset management business. so they CANT charge the subscriber based on “high water” mark or performance based.

102

since you got your first subscriber end of June. So your inception date is technically July. We have seen the same show at least a hundred times.

you are not the first one hitting grand slams with paper money first few month, then go steady easy once you got subscribers to keep the fees coming in

And developers please STOP plugging your strategy on every post on the forum every chance you get.

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