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Can anyone offer any insight as to why NYMEX seat prices have been pretty much stagnant for the past few years, or on a very slow decline, at least? I feel like demand for a seat would only go up over time with the emergence of high-frequency trading since it's basically a discount card for trading NYMEX products.
Can you help answer these questions from other members on NexusFi?
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,386
Thanks Received: 10,206
In the last 2.5 years my NYMEX seat lease has dropped from 900/month to 500/month which is 45% drop. Since the CME has announced the complete closure of the NYMEX floor in the coming months it looks like they have halved again in price. ( Look at the latest prices here)
I personally would classify that as a precarious drop.
Seats & their leases used to offer three major benefits. Ownership of a seat, was ownership of part of the exchange, and had associated voting rights.The second major benefit was access to the trading floor. Every trader in the pit had to have an associated seat. The third major benefit was reduced exchange fees. This was important for locals and large trading companies, but not for brokers executing client order floor.
When the exchanges went public, the owners got bought out and the seats no longer represented their ownership value. As the importance of the pits has declined, the value of the seat as a way to access the floor/pit has also declined to the point that it is now almost worthless. What remains is the value of reduced clearing fees. At a saving of 75c/side ($1.45 vs 70c) and a current seat price of only $250 you only need to be trading 333 lots/month for it to be economical to lease a seat.
I believe there are just over 800 seats, so I guess this is telling is that there are less than 800 people who both know about the seat benefits (many do not) and trade more than 333 lots a month.
You need to factor in that there are a lot less high frequency traders than there were floor traders. Also with regards to energy and NYMEX specifically there are lot less energy trading companies than their used to be and all these companies used to have seats. In fact I believe if you are a company (as opposed to an individual) you actually need two seats to get reduced fees.
i guess seats are at 500/month and can be negotiated if leasing for several months
this offers 0.96c round trip (compared to the $3 per round trip i pay today)
but other fees still apply like CQG routing fee, commissions or clearing etc (which can prob be negotiated depending on volume)
So savings per round trip would be $2.04 per round trip which at $500/month seat license will be BE of 246 round trips
is this right?
and if i guess if i get a seat, this will apply to both NG and CL (which is what i am interested in) but not gold since its on comex?
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,386
Thanks Received: 10,206
What you pay in brokerage, is the combination of exchange fees & your brokers clearing fees.
If you lease a seat, you'll still have to pay your brokers clearing fees.
Seats are $500/month.
Member day-trade rates are 55c side
Member overnight rates are 70c side
Non Member rates are $1.50/side
So on day-trades your saving $0.95/side, so 527 sides/264 round turns a month to breakeven.
On over night trades your saving $0.80/side, so 625 sides/313 round turns a month to breakeven.
Correct. Applies to everything on NYMEX, So NG, CL, Heating Oil, RBOB, Brent etc.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,386
Thanks Received: 10,206
ICE Membership doesn't offer any fee rebates.
The oil products, are all ICE Futures Europe which you can think of as the old IPE.
The softs, are all ICE Futures US which you can think of as the old NYBOT.
Getting both of these shouldn't be difficult
Natural Gas is a weird animal. It's from the original ICE platform, prior to them buying the IPE, NYBOT, NYSE etc etc. back when everything was "OTC" and governed by the Commodity Exchange Act and not the CFTC. Obviously everything is now cleared, and a regulated CFTC future, but it's actually on there "S2F" exchange which is the legacy "Swaps to Futures". Not all brokers have access to "S2F" and the data fees are a lot higher at MINIMUIM COMMISSIONS of $600/month*.
* If your exchange fees (not what your broker charges to clear) are more than $600 data is free. If it's less then $600 you have to pay the difference.
I emailed a few different people at ICE asking about members rates and they kept sending the same link to the non-members rates. I've seen the other posts on this forum (or the other forum) that it's all about who asks ICE for better fees. As such I can't see the value.
