In the US, there’s currently a lot of confusion and paranoia resulting from the Patriot Act, and proposed acts like SOPA and PIPA. As upheld by the Supreme Court, the concept of “lawful interception,” meaning accessing personal information via wiretapping or monitoring your conversations on AIM, etc, turns out to be… lawful. Also, it has recently become known that AIM logs all chats on their system generated on platforms other than their own, and Microsoft and Skype can give governments backdoor access to your conversations. Thus, many people wonder how and where information about them is being stored and compiled. While we cannot speak with any insight on these issues, we at DAS do know where your trade information can be sent, and who it can be requested by.
If you are a retail trader, and you are trading on margin, your broker-dealer is entitled to access your trade history, although this entitlement becomes a little unclear if you are using a cash account. They do still have access to your trade history, but why should they when you are only trading your own money? Also, as you can deduce, your clearing firm also processes your trade history, and they also store this history. While it seems like a lot of people can poke at your information, it is necessary as they are the ones processing your trades and providing margin. However, DAS has the role of facilitating this transfer of information. But rest assured, we have no interest in viewing your trade history or do anything with it besides sending it to your clearing firm. Furthermore, many of the processes in transferring your trade history from firm to firm is automated, so often no one even looks at the file until it reaches its destination. On the other hand, if FINRA needs your trade history, they must request it from the broker-dealer, who in turn, requests it from us. However, the SEC also may not request this information; they can only obtain it via a subpoena, which at that point, your privacy would not be your foremost concern.
If you are a trader at a proprietary trading firm, the privacy of your trade history may be more of a concern. Many prop traders have their own strategies that they use at a prop firm, while some prop firms provide strategies for their traders. For prop traders who have developed their own strategies, they may be concerned about sharing their proprietary information. Prop firms provide capital (or leverage) for their traders, thus they are fully entitled to monitor your trade history, and they definitely actively monitor trade history due to the fact that it is their capital you are trading (or at least that is how it should work). Thus, if you are a very shrewd and astute trader, perhaps a prop firm is not the right place for you because your trade history will be monitored and your strategy can be revealed. Also, the regulatory agencies can access your trade history via subpoena or more benign requests, but for the most part, they are trying to enforce compliance standards, not peek at your strategies.
Generally, retail traders are not concerned about their trade history being private (unless they’re trying to evade taxes or something else devious), but for prop traders and other adept traders, their trade history can be very sensitive information. Thus, if you are a skilled and private trader, I would recommend finding a way to maintain a retail account, your broker will be happy with the amount of trades you are placing, they are often not concerned with your P&L. However, we do notice a trend of former prop traders opening off shore accounts to avoid the PDT rule and to use their strategies with smaller accounts. While we understand that not every trader can maintain an account balance of $25,000, so the PDT rule is inhibiting, we recommend exercising caution while opening an account at an off shores broker dealer if you are in fact trying to avoid the PDT rule. Because of the nature of off shore broker dealers, we have no insight into what they do with your trade history, so perhaps there are some risks involved for the more talented and private traders.
Ultimately, the best way to keep your trade history secure is to try to blend in with other traders. Any flags you throw up, such as committing illegal activities or flaunting your excellent profits, will bring unwanted attention to yourself. Thus, my recommendations would be to learn how to maximize your strategy to operate in a retail environment; while you cannot gain anonymity (trades from dark pools still need to be reported in the end), you can gain invisibility by being seemingly commonplace.