Hi, I'm in the process of becoming a member of the CME, reason for CBOT an IDEM seat to lower my comm's for the YM. There's a $2000 non refundable application fee.
Has anybody gone through that process and if don't might sharing, what did they look for to allow or disallow your membership ? I have no disciplinary issues etc, though am concerned on financial assets they may require - is there a net worth minimum line to cross ?
Site Administrator Swing Trader Data Scientist & DevOps
Manta, Ecuador
Experience: Advanced
Platform: My own custom solution
Trading: Emini Futures
Posts: 49,745 since Jun 2009
Thanks: 32,292 given,
97,490
received
It is advisable to get your broker to handle all the paperwork for you, instead of going it alone. Your broker should do this for free, and should have a person that is very familiar with the process and has a direct contact at CME that can answer questions prior to you submitting the application and fee.
Be sure you are also aware of what happens after you become a member, such as being classified as a professional.
Platform: Sierra Chart, TOS, Tradestation, NinjaTrader
Trading: energy
Posts: 114 since Jul 2012
Thanks: 81 given,
171
received
Very easy to rack up 200$ a month in fees once you flip the pro switch and have to pay 85$ to cme, 95$ to ice and another 50-150$ for stocks and options.
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
Posts: 3,966 since Dec 2013
Thanks: 3,258 given,
7,769
received
I got an IDEM membership many years ago. Back then I had to take all the exams to be a floor trader even though I was only going to trade remotely, not sure if that's still the case now though.
I think the exchanges are more concerned about you being of 'moral character' than they are your financial assets. Your clearing firm is the one who is going to be concerned about your assets.
Agree with Mike, your broker should be able to walk you through this process. My broker (Advantage Futures) did everything for me except actually take the exam. I now also have a NYMEX seat. They do everything. Arrange the leases, payment, communication with the exchange.
Data fees can be annoying but the tax implication can be huge. I believe having a seat means your trading gains are also subject to Self Employment tax. Not as big an issue today with the ACA investment tax but for some people it will be an additional $15k odd cost. Very surprised this doesn't get discussed more here or in most trading places. I suspect many people either don't know this or just conveniently forget to know. As mike says check with your accountant.
The following 3 users say Thank You to SMCJB for this post:
I have had cbot seats for 20 years. AM and IDEM. sold my AM because i was not trading treasury's anymore. Held the IDEM because i started trading YM. Sold the IDEM in Dec of 2014 because of the b.s. CME data fees and also was not really trading YM anymore. Presently, i almost exclusively trade TF and see no need for a membership.
Unless you are trading actively in YM, i don't see a reason to buy an IDEM. Trading has always been my primary source of income...so the self employment tax thing is not a factor. I believe i am still subject to that even though i don't have a seat.
Your broker should be able to see how much you are trading and advise you.....
The Market is Smarter than You Are
The following 2 users say Thank You to tflanner for this post:
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
Posts: 3,966 since Dec 2013
Thanks: 3,258 given,
7,769
received
I got (leased!) my IDEM membership not for it's trading privileges but because it made me an Eligible Contract Participant ("ECP") under the commodity exchange act. Having ECP status enabled me to trade a lot of Over-The-Counter energy products, and trade on ICE and IDEM was (probably still is) the cheapest seat I could get. Since Dodd-Frank though, nearly everything is now a regulated future and as such the ECP designation is no longer valuable.
I now have (lease) the NYMEX seat for the reduced fees. 1000 lots a month and it's paid for.
The following 3 users say Thank You to SMCJB for this post:
Other question, after the initial application of $2000 is paid, if you interrupt leasing a seat in order to resume it later, are you charged again a new application fee if you let too much time go (I was talked about a reduced application fee of $1000 for all secondary exchange applications unspaced in time, otherwise $2000 again) or not ?
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
Posts: 3,966 since Dec 2013
Thanks: 3,258 given,
7,769
received
You could always ask your broker. Everything to do with the seats I lease is done through my broker. I have no contact with the exchange* or the people I lease from.
* If you use the seat to get data netting, then that (the data netting) is all done directly with the exchange.
The following 2 users say Thank You to SMCJB for this post:
Edit: On second thoughts, I recall paying application fees each time I bought a seat but not when I sell them, so maybe you're only charged on the entry leg.
The following user says Thank You to artemiso for this post:
$1,000 for the first membership within each exchange, and a $300 transfer fee for purchasing each additional seat on the exchange. I don't think you pay anything for selling.
I have several vacant seats lying around by the way, let me know if you are looking for a lease.
The following 2 users say Thank You to artemiso for this post:
Just wondering since i have seen so many interest in becoming a CME member recently, what size of volume does one need to do to really benefit from such a membership?
1. You can do the breakeven analysis yourself by looking at the fee schedule, say for E-mini equity indices you are going from $1.18 to $0.35, so $0.83 of savings per contract. You can divide the monthly lease by that amount to get a sense of monthly breakeven volume.
2. You also need to take into account the variance of your volume (and if you're buying, the variance of market prices for the seats).
The following 5 users say Thank You to artemiso for this post:
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, GC, SI & Bitcoin
Posts: 3,966 since Dec 2013
Thanks: 3,258 given,
7,769
received
One thing to consider, being a member (via seat lease or purchase) will make you a professional in CME's eye's so while your clearing rates go down, your data fees go up! Another advantage though is that you become eligible for data netting, meaning you pay the data fee once and not once per account/device etc.
The following 3 users say Thank You to SMCJB for this post:
Hi! Your broker should really help you through the process and paperwork. We have assisted more than a few client through the process in order to lower their exchange fees and overall costs.
Are you doing this as an individual or a corporation? Feel free to PM me with questions.
PM with any questions about Cannon Trading (800) 454-9572 (310) 859-9572. Trading commodity futures, forex and options involves substantial risk of loss. The recommendations contained in this post are of opinion only and do not guarantee any profits. These are risky markets and only risk capital should be used. Past performance is not necessarily indicative of future results.
