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why is there a daily break?
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why is there a daily break?

  #1 (permalink)
Elite Member
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why is there a daily break?

Hi,why is a daily break in trading? and they are all different times. it makes it annoying to account for this with automated trading.

just weird everything is not 24 hours these days!

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  #2 (permalink)
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  #3 (permalink)
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Because futures are expiring contracts. They need the breaks to conduct settlements. These breaks are also used to ensure minimum margin requirements are being met. It is basically a "true up" moment.

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  #4 (permalink)
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tpredictor View Post
Because futures are expiring contracts. They need the breaks to conduct settlements. These breaks are also used to ensure minimum margin requirements are being met. It is basically a "true up" moment.

but the settlement dates are once a month. so why is the break not at the end of the month only (at settlement??).

and why do you need a break to calculate margin? it would be instant. and thats done by your brokers before you even trade right? not by the CME?

so i dont buy it! my guess is its just tradition from the pen and paper days!

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  #5 (permalink)
 Vendor: www.orderflowdashpro.com 
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I agree a lot of things about futures (large contract sizes) are probably hold overs. The CME publishes recommended "initial margin" requirements but I think it is up the member firms what rate they actually set or else how could they offer the cheaper day trading rates? So, I think if you're a member firm then the CME is kinda trusting you to manage your book.

Right, whatever broker you are trading at should be managing your risk to prevent you from going over but the clearing with the counter party is probably not processed until after the close.

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  #6 (permalink)
Market Wizard
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LukePoga View Post
Hi,why is a daily break in trading? and they are all different times. it makes it annoying to account for this with automated trading.

just weird everything is not 24 hours these days!

While it might seem obvious but the daily break in trading separates sessions into different days. This is important for multiple reasons, both from an accounting and bookkeeping perspective and an operations perspective. These include but are not limited to
  • Margining Requirements
  • PnL Processes
    • Settlement Price
    • PnL Calculation / Margining
    • Break Point for Broker Account Statements
  • Regulatory Reporting Cutoff
    • Position Limit Accountability Reporting
    • Volume / Open Interest Reports / CFTC Reports
  • Futures & Options Expiration / Exercise
  • Lots of Computer Stuff / Logistics
    • Reset Trade Numbers / Volume Account etc
    • Re-establish settlements (there are contracts that trade at differentials to prior settlement and not outright price)
    • Restart/Reboot/Memory CleanUp/etc

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  #7 (permalink)
Trading for Fun
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SMCJB View Post
While it might seem obvious but the daily break in trading separates sessions into different days. This is important for multiple reasons, both from an accounting and bookkeeping perspective and an operations perspective. These include but are not limited to
  • Margining Requirements
  • PnL Processes
    • Settlement Price
    • PnL Calculation / Margining
    • Break Point for Broker Account Statements
  • Regulatory Reporting Cutoff
    • Position Limit Accountability Reporting
    • Volume / Open Interest Reports / CFTC Reports
  • Futures & Options Expiration / Exercise
  • Lots of Computer Stuff / Logistics
    • Reset Trade Numbers / Volume Account etc
    • Re-establish settlements (there are contracts that trade at differentials to prior settlement and not outright price)
    • Restart/Reboot/Memory CleanUp/etc



Thanks for this. As an IT manager, I can appreciate the need for interruptions, and the need for maintenance to ensure high availability.



Sent from my iPad using futures.io

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  #8 (permalink)
Elite Member
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i appreciate your reply.

none of those points need to stop the market. settlements occur on expired contracts and are no longer traded so its got nothing to do with that.

accounting and margin can be calculated in parallel.

matching engines do not need memory clean up.

all reports can be done in parallel as well. (read only mirror for example).


(IT manager above, you should know better lol)

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  #9 (permalink)
Trading for Fun
Austria
 
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I don't know any reason, why they should ask YOU how long and when they open and you can be sure, they have a reason for their sessions.

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  #10 (permalink)
Elite Member
boston
 
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tpredictor View Post
I agree a lot of things about futures (large contract sizes) are probably hold overs. The CME publishes recommended "initial margin" requirements but I think it is up the member firms what rate they actually set or else how could they offer the cheaper day trading rates? So, I think if you're a member firm then the CME is kinda trusting you to manage your book.

Right, whatever broker you are trading at should be managing your risk to prevent you from going over but the clearing with the counter party is probably not processed until after the close.

Ha - "Broker Managing Your Risk" ? That's a funny one -- last time i checked in the last 10 years - they do EVERYTHING to get you to be OVER LEVERAGED!

That being said there are brokers like FT71 that I appreciate and do really care about traders.

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