Block trades with the CME | Traders Hideout


futures.io - futures trading strategies, market news, trading charts and platforms


Traders Hideout


Discuss day trading practices and futures trading strategies on this forum for all markets. This forum is also for discussing and reviews for brokers, data feeds, and commercial or third party add-ons




 

Block trades with the CME

  #11 (permalink)

Legendary Market Wizard
Houston, TX
 
Trading Experience: Advanced
Platform: XTrader
Broker/Data: Advantage Futures
Favorite Futures: Energy
 
Posts: 2,969 since Dec 2013
Thanks: 2,410 given, 5,315 received


Grantx View Post
I guess what Im still confused about is if someone has a 2000 lot order to be processed, how is 'blocking' it off exchange different to simply offering the order in smaller sizes to the exchange?

Large orders can and do move markets on exchange, as all the Algo's and scalpers try and get in front of it. Over-the-Counter ("OTC") somebody might ask for a market, without indicating direction. ie
Trader: "Looking for March a thousand up"
Broker: "I have a market maker that will show 2.832/2.835 a thousand up"
Trader: "Thanks I'll buy a 1000 at 2.835"
This does happen. What confuses me is why a market maker would ever want to do that, but they do!

Grantx View Post
Its the same thing isnt it? This is a process that obviously offers some advantage but I dont see what it is as there are now more steps involved with blocking and clearing off the exchange. If it has more to do with spread trading, calendar swaps, options etc then just tell me to shut up and I will go read further on those.

It differs product to product (and I'm only talking energy). In Natural Gas I would say it's predominatly options, strips and strip spreads and even then volume is normally larger than many orders executed on exchange. A Typical example would be a winter 100/month $4/$5 Call Spread with delta hedge. In this case winter means its the Nov-Mar strip. Hence with one order your buying 100 calls, selling 100 calls and selling a delta hedge, all in 5 different months at the same time. In addition in Oil there are a lot of products that just don't trade electronically, but are cleared on the exchanges. These are probably products you have never heard of and not your basic WTI, HO, RB, Brent, Gasoil. But yes you are probably right, the large outright orders are probably the rarer of the orders.

On CME, you can see every trade that is Blocked here Block Trades - CME Group
On ICE, I believe you need WebICE access to see block trades.

When looking at block trades you need to be careful as you may not know what you are looking at. For example you might see 1000 lots of NGH7 block cleared. What does this mean? Did a large trader just buy or sell 1000 lots? Or is there a 1000 lot trade on ICE as well and this is just a NYMEX-ICE margin reducing trade? Or is that 100 lot/month Cal 2019 trade, cleared two minutes later, the other side of a H7/Cal19 spread?

Reply With Quote
The following 2 users say Thank You to SMCJB for this post: