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CME Rule 575

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Market Wizard
Amsterdam, The Netherlands
 
Trading Experience: Intermediate
Platform: Sierra, IRT, ToS, Ninja
Broker/Data: Stage 5
Favorite Futures: NQ
 
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Posts: 645 since Oct 2011
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Recent FT71 comment

FT had quite a comment on this in his Friday webinar to Stage 5 clients.

As we rolled this week, I started out asking him about the backwardation in the ES and if it was normal or not. (bear with me)

His reply was that:

a) We have had backwardation for a really long time now.

b) It is due to QE and similar programs in other countries keeping interest rates virtually at zero, so there is virtually no carrying cost to a futures contract these days.

c) He feels we wouldn't need something like 575 if there were more diverse opinions in the marketplace, but right now most big players are lining up to see what the fed does next.

d) He hopes that the fed will back away from such low rates and when it does, stuffing will go away by itself because it will no longer be possible.

I thought that was great insight. A lot more than I would have figured out! I guess that's why he's FT.

Mean time, I think 575 can only help.

We'll see what happens....

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