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Inverting this provides the Prop shop business proposition and the right way to think about CanOz’ question.

All propositions start from an equal footing – but there is nothing here to evaluate – so my vote has to be - depends on the business plan.

Looking at the prop shop proposition - The traders are basically commission only employees – probably very easily dispatched if they don’t perform - So variable costs . The risk management is not delegated to the trader so that stays in the control of the capital provider. Trading limits would obviously only be increased for traders earning in excess of required return. Margin offsetting probably keeps capital requirements low for given exposure.  All-up - Potential, but the Fiduciary risks and the mismatch of downside risk between capital and labour (when labour can create losses quickly) means the capital provider really needs to be active in the business. Probably not something I would passively invest in – (Are there any publically listed prop shops anywhere in the world? – it would be interesting to look inside the books)