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alternatives to cme products with their obscene commissions?


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alternatives to cme products with their obscene commissions?

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  #1 (permalink)
quintana roo, méxico
 
 
Posts: 79 since Mar 2013
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hello everyone.


i have been doing some research on index futures contracts other than the most traditional cme products with their obscene commissions structure. i have learned there exist a number of very attractive alternatives to cme products like the fdax, the fdxm (i undertand both trade in eurex), as well as asian indices mini futures contracts like those of the nikkei, hang seng and kospi indices (jnm ose, nke ose, hsi hkfe, kospi200? krx).


i would want to know which brokerages associated with ninjatrader let clients trade these futures contracts (as well as any other futures contracts i may have left out of that list), and the costs associated with these products like data fees, commissions and so on. also, if I wanted to find the information for daily depth of market / liquidity, margin costs, average spreads, average volatility / range (atr) and available brokerages / platforms for as many indices futures contracts in the world as was possible to carry out an exhaustive, in depth comparison, where could I find this data?


thanks in advance, regards.

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Not sure many people would consider a $1.14 commission on a $108k ES contract obscene but your right DAX is cheaper (€0.50) and their contract is bigger (€253k).

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  #4 (permalink)
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maggtrading View Post
hello everyone.


i have been doing some research on index futures contracts other than the most traditional cme products with their obscene commissions structure. i have learned there exist a number of very attractive alternatives to cme products like the fdax, the fdxm (i undertand both trade in eurex), as well as asian indices mini futures contracts like those of the nikkei, hang seng and kospi indices (jnm ose, nke ose, hsi hkfe, kospi200? krx).


i would want to know which brokerages associated with ninjatrader let clients trade these futures contracts (as well as any other futures contracts i may have left out of that list), and the costs associated with these products like data fees, commissions and so on. also, if I wanted to find the information for daily depth of market / liquidity, margin costs, average spreads, average volatility / range (atr) and available brokerages / platforms for as many indices futures contracts in the world as was possible to carry out an exhaustive, in depth comparison, where could I find this data?


thanks in advance, regards.

INTERACTIVEBROKERS

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  #5 (permalink)
quintana roo, méxico
 
 
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SMCJB View Post
Not sure many people would consider a $1.14 commission on a $108k ES contract obscene but your right DAX is cheaper (€0.50) and their contract is bigger (€253k).



well, for the most heavily traded cme products (es, nq) total commissions of $5 usd per round trip used to be common. i understand cme still has even more expensive products (usd denominated nikkei and others). compare that to the commissions paid if trading the most expensive stock i know of: the brk.a, if i'm not mistaken, it now has a tick size of 1c, and even in the worst case scenario, total commissions for a round trip trade would never be greater than 50c per share. for me, really anything above 10c in total commissions for cme products would be unjustifiable, that's why i am looking for better alternatives elsewhere.


@Obelixtrader , thanks. i will write an email to interactive brokers to learn what european / asian futures contracts they have available.

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  #6 (permalink)
 
 
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maggtrading,

I might be wrong here and it depends on the volume you make of course, but you will likely end up paying somewhere between $4 and $5 per roundtrip on almost every futures trade (round turn; for the common products and with regular fees and commissions i.e. not being a member or leasing a seat). The CME or any other exchange for that matter don't charge that amount in total, it usually consists of your broker's fee, the exchange and clearing fees.

@mattz can surely offer more sound information on that matter.

Regards,

ABCTG


maggtrading View Post
well, for the most heavily traded cme products (es, nq) total commissions of $5 usd per round trip used to be common. i understand cme still has even more expensive products (usd denominated nikkei and others). compare that to the commissions paid if trading the most expensive stock i know of: the brk.a, if i'm not mistaken, it now has a tick size of 1c, and even in the worst case scenario, total commissions for a round trip trade would never be greater than 50c per share. for me, really anything above 10c in total commissions for cme products would be unjustifiable, that's why i am looking for better alternatives elsewhere.


@Obelixtrader , thanks. i will write an email to interactive brokers to learn what european / asian futures contracts they have available.


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  #7 (permalink)
 
 
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ABCTG View Post
maggtrading,

I might be wrong here and it depends on the volume you make of course, but you will likely end up paying somewhere between $4 and $5 per roundtrip on almost every futures trade (round turn; for the common products and with regular fees and commissions i.e. not being a member or leasing a seat). The CME or any other exchange for that matter don't charge that amount in total, it usually consists of your broker's fee, the exchange and clearing fees.

@mattz can surely offer more sound information on that matter.

Regards,

ABCTG

@ABCTG You are 100% right in terms of your pricing as far as the range on ES and NQ as total pricing, all in,
No one get 10 cents commissions unless they are really heavy traders and their average win may be less than a tick on a given instrument. Also, these kind of pricing also accompanied by lower CME fees due to memberships, etc.

I still find that many do not know the exact commission they pay. Namely, they do not know the commissions part, routing, exchange, etc. The components are important because they allow you to choose the platform accordingly and the broker.

Thanks,
Matt Z
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I think he's arguing for 10c in "total commissions" ie including exchange fees .... not clearing!

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SMCJB View Post
I think he's arguing for 10c in "total commissions" ie including exchange fees .... not clearing!

Then I suggest that he/she looks at the CME rates on ES under membership and no membership...just to realize that the exchange that takes at times up to 400% or more than the broker in the overall rate.

Matt Z
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Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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  #10 (permalink)
quintana roo, méxico
 
 
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well, thanks everyone for your participation.


i do know that the total commissions a retail trader pays are determined by what the exchange, the broker, and other institutions take.


still, the point i make is that futures contracts commissions are ridiculously high, and cme's are the worst of all. there's no justification for making retail traders pay anything above 10c round trip per trade; keep in mind that to the exchange and the brokers futures contracts trades are nothing but binary values changing back and forth in their databases, they have zero variable costs per trade. the fact of the matter is that right now futures exchanges get away with the kind of commissions structures they have in place simply because they have monopolistic power as there exists virtually no competition. for example, in méxico, there still are local equities brokers who will charge retail investors commissions of 1% of the value of their trade every time, no matter what. in the usa, back in the day, commissions and everything else were also far worse for all instruments. exchanges used to have 25c increments so investors had huge slippage going against them every time and commissions also used to be excessive until competition and regulation reined in the abuse at least when it comes to equities.

i want to do what i can to oppose the abusive practices of cme myself, and trading exclusively other exchanges' products seems to me to be an excellent strategy. from the research i have done, total commissions for the fdxm and other eurex products can be between 3 and 4 usd, which is between 1 and a full 2 usd lower than comparable cme mini products. 2 usd per round trip over a number of trades a day and over multiple contracts adds up to a lot of money over time, and as i argued there's really no justification to hand over a premium to cme and associated brokers when they would still be making a killing even at 5c per contract for each of them.


i still haven't been able to find the commissions and conditions for futures contracts for the jnm ose, nke ose, hsi hkfe and kospi krx, but i will definitely look into those options too, and wouldn't be surprised in the least if costs and commissions were also significantly lower compared to cme's products.

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Rybnik Polska
 
 
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KRX and JPX (old OSE ) are cheapest exchanges to trade.

Nikkei mini costs 40 Yen per site and can be much lower.Tick value 500 yen

Kospi 200 costs starts at 0.00145% so its not always the same but normally it cost 4000 won per site - while tick value is 25 000 ...

This is ,,starting'' commissions,if you make volume you can get much lower commission.

But...even as Im very specific trader who looking for very uncommon products I still not understand why you says this.CME is not expensive - look on some single stock futures or emerging markets futures - this is really expensive !.
For example our FW20 got 20 zloty tick and commission is ... 20 zloty too .With much lower volatility - so no,CME is not so expensive :P

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maggtrading View Post
...


i still haven't been able to find the commissions and conditions for futures contracts for the jnm ose, nke ose, hsi hkfe and kospi krx, but i will definitely look into those options too, and wouldn't be surprised in the least if costs and commissions were also significantly lower compared to cme's products...

I just wanted to point out that the total costs for CME products are not unreasonable. Here, I'll post a pic to show it...



That day of day-trading was in CL, NQ and TF (right before it went to ICE.) It was 20 contracts traded R/T during the day. TWENTY. Are you telling me that those fees are unacceptable for such liquid markets? I think it is a reasonable expense in doing business. Your trading BUSINESS.

How many small brick-and-mortal businesses spend money on items to increase their profitability and they make no profit for the day, and wind up losing for the day because of the expense for that day? Same stuff here I reckon'. But for what we are doing, our hours are way better than brick-and-mortar, there is no physical labor, we are our own bosses, and we go to work when we want.

The value of THAT is worth its weight in gold. Don't believe me? Go try working in big-box retail, at an entry level position, after you've been trading for a time and decide to try something new. Muhahaha, you'll snap back to trading so fast you'll get sciatica or something.

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quintana roo, méxico
 
 
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HoopyTrading View Post

That day of day-trading was in CL, NQ and TF (right before it went to ICE.) It was 20 contracts traded R/T during the day. TWENTY. Are you telling me that those fees are unacceptable for such liquid markets? I think it is a reasonable expense in doing business. Your trading BUSINESS.

How many small brick-and-mortal businesses spend money on items to increase their profitability and they make no profit for the day, and wind up losing for the day because of the expense for that day? Same stuff here I reckon'. But for what we are doing, our hours are way better than brick-and-mortar, there is no physical labor, we are our own bosses, and we go to work when we want.

The value of THAT is worth its weight in gold. Don't believe me? Go try working in big-box retail, at an entry level position, after you've been trading for a time and decide to try something new. Muhahaha, you'll snap back to trading so fast you'll get sciatica or something.


this makes no sense top to bottom.

first of all, the fees associated to cme products are outrageous and unacceptable. 4.5 usd for two clicks of a mouse is ridiculous. it is traders who bear all the risk and provide all the capital, and it is the same traders who pay those ridiculous fees who give some markets the liquidity they have. cme really does next to nothing for anyone else.

just for illustration, the fdax or fdxm contracts are far more affordable and they even have better ranges than the cme products themselves (and it seems like other foreign futures contracts i have mentioned before are also far superior to cme's instruments, it's just that i really haven't had the time to do some extensive research to confirm this). for someone whose primordial interest and objective is business; looking for the best conditions and opportunities to make the most possible money is the only credible and legitimate modus operandi. if you are giving money away for nothing, that's the very antithesis of business.

now, i am a trained professional and do work on super cool and interesting consulting projects, i wouldn't be in the position or have the need to apply for an entry job anywhere. and that kind of comparison doesn't make sense either, is there anyone working those kind of dead end, physical jobs that would have capital to put at financial risk plus the skill to make money trading financial instruments? of course not.

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Boston, MA
 
 
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maggtrading View Post
this makes no sense top to bottom.

first of all, the fees associated to cme products are outrageous and unacceptable. 4.5 usd for two clicks of a mouse is ridiculous. it is traders who bear all the risk and provide all the capital, and it is the same traders who pay those ridiculous fees who give some markets the liquidity they have. cme really does next to nothing for anyone else.

*shrugs* If I can close a trade for +$100 bux, and had to pay $4.50 to do it, for what could take only a few minutes, why would I complain? In a retail store, one could go for hours with no customers, so no "2 clicks to make money". There are labor fees, utility fees for the electricity etc., and the investment in the physical inventory. When those expenses are removed, what is the net profit?


maggtrading View Post
just for illustration, the fdax or fdxm contracts are far more affordable and they even have better ranges than the cme products themselves (and it seems like other foreign futures contracts i have mentioned before are also far superior to cme's instruments, it's just that i really haven't had the time to do some extensive research to confirm this). for someone whose primordial interest and objective is business; looking for the best conditions and opportunities to make the most possible money is the only credible and legitimate modus operandi. if you are giving money away for nothing, that's the very antithesis of business.

There are stores that will have "free giveaways", in order to attract more business in the future. They give things away for free. It's called the understanding that you need "foot traffic". It relies on two tenets of retail...People like free shit, and when they get free stuff at the front door, they are most likely walking into the store. This dove-tails into the second retail tenet... People love to impulse shop. There have been studies galore about this. You yourself may have experienced it. Like when you are at the register, and you see that stick of gum, or that cheep set of batteries. You think, "Yeah, I meant to get that yesterday". So you buy it. Cha-ching, the store just made money by giving away" free stuff".


maggtrading View Post

now, i am a trained professional and do work on super cool and interesting consulting projects, i wouldn't be in the position or have the need to apply for an entry job anywhere. and that kind of comparison doesn't make sense either, is there anyone working those kind of dead end, physical jobs that would have capital to put at financial risk plus the skill to make money trading financial instruments? of course not.

Yes, maggtrading, there are people like that out there. They are called people who decide to take the future into their own hands, quit their dead-end physical labor job, and try to open up their own business. It happens every day in the USA.

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  #15 (permalink)
Boston, MA
 
 
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maggtrading, one more point to illustrate what I mean...


Quoting 
...keep in mind that to the exchange and the brokers futures contracts trades are nothing but binary values changing back and forth in their databases, they have zero variable costs per trade.

Think about your bank account. Why do many banks charge a monthly fee if your balance drops below an arbitrary limit, say $200? It doesn't cost them or their computers a bloody dime in a database, if the value of your cash in checking or savings is $201 or $199. What's the reason? *shrugs*

What about when you go to Burger King and want an extra slice of cheese on your Whopper™, and they charge you $.25 more for it? You think, "They are already making a killing on this crappy POS product, why should I pay $.25 more for a slice of extra cheese?"

Same thing. Cost of doing business with a bank, or an exchange, or fast-food joint and whatnot. If you don't agree with the associated costs of doing business with the establishment, then take your business elsewhere.

Easy peasy!

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  #16 (permalink)
 
 
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@maggtrading

I disagree with your analysis and approach. I do not want to be rude or present it in such a way, but who are you decide on cost and what it should be? I may respect a cost analysis from a trading "insider" that has a valid point why cost should be lower, and prove that we are being "ripped off", but you just say it should be lower based on the fact that you "think" it should be lower? Again, I am NOT saying it in a rude way, rather saying that any argument should be based on logic and so far I have not seen one besides "they dont deserve it" and "others are cheaper"....

Further, you choice of trading a product based on cost in not inline with any logic that I have ever encountered in trading. Traders base it on volatility , liquidity, leverage, and others variables while taking cost as a given. To claim that any product that is superior to other based on clearing cost is flawed. The FDAX is not better than the ES because there are other variables, like slippage. You may find that some products may cost you a lot more in the long run because of the gaps in stops, large volatility on your equity, etc. I have seen traders on this forum switch to CL from ES because in their opinion it presented them with better opportunities. Cost of CL is 1.45 While ES 1.17 per side....as an FYI.

You claim that the traders takes all the risk. not so! The exchange is the counterparty risk.
"CME Clearing serves as the counterparty to every trade, becoming the buyer to each
seller and the seller to each buyer, limiting credit risk and therefore mitigating the risk of default"

Finally, I am not all for the CME exchange although I respect that any organization has tremendous cost of technology and execution. Also, the CME offers you membership in the event that you do large volume where you can lower your cost to 40 cents.

My suggestion is to focus on a product that you can trade based on your risk tolerance and capital, not its clearing cost.

Thank you,

Matt Z
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There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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quintana roo, méxico
 
 
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mattz View Post
@maggtrading

I disagree with your analysis and approach. I do not want to be rude or present it in such a way, but who are you decide on cost and what it should be? I may respect a cost analysis from a trading "insider" that has a valid point why cost should be lower, and prove that we are being "ripped off", but you just say it should be lower based on the fact that you "think" it should be lower? Again, I am NOT saying it in a rude way, rather saying that any argument should be based on logic and so far I have not seen one besides "they dont deserve it" and "others are cheaper"....

Further, you choice of trading a product based on cost in not inline with any logic that I have ever encountered in trading. Traders base it on volatility , liquidity, leverage, and others variables while taking cost as a given. To claim that any product that is superior to other based on clearing cost is flawed. The FDAX is not better than the ES because there are other variables, like slippage. You may find that some products may cost you a lot more in the long run because of the gaps in stops, large volatility on your equity, etc. I have seen traders on this forum switch to CL from ES because in their opinion it presented them with better opportunities. Cost of CL is 1.45 While ES 1.17 per side....as an FYI.

You claim that the traders takes all the risk. not so! The exchange is the counterparty risk.
"CME Clearing serves as the counterparty to every trade, becoming the buyer to each
seller and the seller to each buyer, limiting credit risk and therefore mitigating the risk of default"

Finally, I am not all for the CME exchange although I respect that any organization has tremendous cost of technology and execution. Also, the CME offers you membership in the event that you do large volume where you can lower your cost to 40 cents.

My suggestion is to focus on a product that you can trade based on your risk tolerance and capital, not its clearing cost..


@mattz


you make more reasonable points.


i still have made several arguments as to why i consider cme's commissions and fees to be excessive and unacceptable. the main issue is that when it comes to futures contracts in the usa cme operates as a monopoly, and they can extract a lot of money from clients for no good reason other than being able to. similar instruments like stocks used to also be dealt under very abusive conditions but competition and regulation have driven commissions and fees down significantly, futures contracts have to go down the same road at some point or another.


i did provide evidence for my claims to the best of my abilities; i cited the fact that variable costs for electronic transactions are always zero, and also i recounted how financial institutions that have been reined in by competition and regulation have limited their abuses, but not those that can do as they please. in turn, i ask of you, what evidence have you ever seen from cme to justify their commission structure? do you just assume and blindly believe in cme if they say all they charge for is justified?


on another point you brought up, if cme was the counterparty to every position opened in their markets i would maybe be willing to accept commissions 1 cent higher than the 10 cents total per contract round trip that i have made the argument should be the maximum admissible commission (keep in mind, commissions in foreign exchange products normally increase the spread a trader pays by one pip, and in those products your broker does always hold the other end of any position you initiate). but can we take cme at face value if they say they always are the counterparty to all the positions initiated in their markets? would any limit position you place on a cme market always get filled no matter what? do traders suffer zero slippage when a stop position they had in a cme market has been triggered? everyone who has ever traded cme products knows full well that's absolutely not the case.


with the information i have right now, i would definitely trade eurex products exclusively. they are far superior overall, have better movement, reasonable capital requirements and are also cheaper than comparable cme products. anyway, i will still do as much research as possible on and give a lot of consideration to the products that other exchanges like kospi, hsi and japan exchange have on offer before making any decision, they could be even better than eurex's.




just this past week, cme was in the news, and for all the wrong reasons. it turns out that cattle futures contracts have become useless as a risk management tool because cme has allowed this market to become dominated and run by algorithms and technical traders. cme has continued with their abusive practices typical of modern markets (the exact opposite of what a good exchange like iex is trying to make available), like selling differentiated access to data, allowing high frequency traders to run rampant, charging for data feeds and also for every trade, etc. the result has been that cme has destroyed the cattle futures market and that those kind of contracts do not exist anymore at this time.


Welcome to the ?Meat Casino?! The Cattle Futures Market Descends Into Chaos - WSJ


“We need to figure out why the cattle market can go from $1.30 in one week to $1.15, when we haven’t added more cattle to the marketplace,”

why? because algorithms and technical traders are running that market.

“Every aspect of the cattle futures contract is under review to see if there’s a way to redesign so it’s a more effective tool for risk management,”

yeah, sure, with their priority being ever greater profits at any cost, they will never address the root causes of the destruction of this market. you can't have algorithms and technical traders in your market and expect the end product to be useful and to respond to fundamentals.

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maggtrading View Post
“We need to figure out why the cattle market can go from $1.30 in one week to $1.15, when we haven’t added more cattle to the marketplace,”

why? because algorithms and technical traders are running that market...

“Every aspect of the cattle futures contract is under review to see if there’s a way to redesign so it’s a more effective tool for risk management,”

yeah, sure, with their priority being ever greater profits at any cost, they will never address the root causes of the destruction of this market. you can't have algorithms and technical traders in your market and expect the end product to be useful and to respond to fundamentals.

Gee, isn't that kind of the same thing as why does CL, after an inventory market report comes out and shows inventory way below forecasts, the CL market jumps a tad, and then continues to drop like a rock? What's the difference? At least the CME on the LE front is actively reviewing all their offerings and trying to adjust them to what is best suiting the constantly-changing market conditions. This is an encouraging sign. Besides, if you want to trade live cattle outside of the CME, you have options available you know...

https://www.beefnet.org/

Do they provide margin? Nope. So fork up the cash for every head of cattle if you don't want to pay fees to the CME. Cheaper to pay a few bucks per contract to the CME to trade cattle on leverage, rather than fork out the actual cash needed.

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Legendary Market Wizard
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maggtrading View Post
just this past week, cme was in the news, and for all the wrong reasons. it turns out that cattle futures contracts have become useless as a risk management tool because cme has allowed this market to become dominated and run by algorithms and technical traders. cme has continued with their abusive practices typical of modern markets (the exact opposite of what a good exchange like iex is trying to make available), like selling differentiated access to data, allowing high frequency traders to run rampant, charging for data feeds and also for every trade, etc. the result has been that cme has destroyed the cattle futures market and that those kind of contracts do not exist anymore at this time.

Welcome to the ?Meat Casino?! The Cattle Futures Market Descends Into Chaos - WSJ

“We need to figure out why the cattle market can go from $1.30 in one week to $1.15, when we haven’t added more cattle to the marketplace,”

why? because algorithms and technical traders are running that market.

“Every aspect of the cattle futures contract is under review to see if there’s a way to redesign so it’s a more effective tool for risk management,”

yeah, sure, with their priority being ever greater profits at any cost, they will never address the root causes of the destruction of this market. you can't have algorithms and technical traders in your market and expect the end product to be useful and to respond to fundamentals.

That's an interesting article thanks for the link. But did you yourself actually read it??

Quote
"The number of participants negotiating prices started to decrease in the 1980s and today, only small number of cash trades—which take place just once or twice a week—serve as a proxy for the base price used by the rest of the industry. Most of the cattle delivered to slaughter plants today are priced using a formula that incorporates the cash market value as a base, plus or minus premiums and discounts.

Someone sells 40 head in Iowa and it has the potential to revalue all the cattle in the nation,” Mr. Albers said.

The deals that do take place between cash market buyers and sellers frequently end up being completed on Friday after the 2:05 p.m. ET close of the futures market. That means financial traders spend most of the week with limited up-to-date data."

That's not 'algorithms and technical traders' ruining the market, that's a spot cash market evolving and dieing, and as such futures markets have no reference point.

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maggtrading View Post
just this past week, cme was in the news, and for all the wrong reasons. it turns out that cattle futures contracts have become useless as a risk management tool

Yeah, I'm thinking the same thing as @SMCJB... the article literally says that the problem lies with the spot market, which is the opposite of what you're alleging.


maggtrading View Post
because cme has allowed this market to become dominated and run by algorithms and technical traders.

That's not true. Agricultural markets have always been less automated than say, the, energy markets.


maggtrading View Post
cme has continued with their abusive practices typical of modern markets (the exact opposite of what a good exchange like iex is trying to make available),

I have to say without a doubt that CME has invested a lot more in technological innovation that benefits us as consumers than IEX since 2012.

IEX doesn't have as many customers or as many products to maintain and the most innovative part of their company (software stack) is actually outsourced to another company, and they outsource their core hosting infrastructure as well.

In contrast, when you have a very large number of customers, it becomes harder and more expensive to make it fair across everyone. CME had to work behind the scenes with a startup, among which there were a few guys who revolutionized modern HPC and computer architecture, to overhaul their matching engine and market data distribution that has actually leveled the playing field significantly. They had to be the first to try out technology from Juniper that was highly untested at the time (it wasn't yet released to the retail electronics market) and they invested substantial manpower into being the first adopters. It's a technical feat of great proportions and Eurex is playing catch up (1.5-2 years behind probably). They have their own data center and don't owe their technical credit to someone else. They didn't spend money on a marketing video or go on CNBC parading their work.

Here's why I like CME. This is the reception area to their CEO's office. There's no windows. It's on one of the lowest floors in the building and it isn't situated at a special corner with a view. Even their colo team works on a higher floor than their CEO.



You walk in to Gill's office and it's two steps down from the furniture in the reception area. It reminds me of my professors' offices in university. It doesn't have a panoramic glass facade or extra leg room. They barely even stock up on working pens at their office, if you went to an average law firm their conference room would be laden with notepads and pens custom manufactured with their firm's logo.

You can check out IEX's office. Trading Up For a Better Space | 4 World Trade Center | Silverstein Properties This how a startup chooses to spend its money compared to a $35B business.

Some people think that the electronic market making business is cold-blooded and we just trade where we can make the most money. Like many other EMMs, I actually make moral judgments of the businesses I deal with and I don't just choose to be a market maker at a venue because there's money to be made on that venue. You are free to support IEX however you like. I'm happy for them because it's great that one can be successful as an entrepreneur in fintech and they have a bunch of smart tech guys, but they have yet to prove themselves and really show that they put their customers' interests in front of themselves like CME.


maggtrading View Post
like selling differentiated access to data, allowing high frequency traders to run rampant, charging for data feeds and also for every trade, etc.

I'm paying for the full license because I'm running what they call an "ATS". I'm pretty sure I pay more in monthly CME market data fees than most people here earn or lose monthly from trading altogether, so I could argue that I have more right to complain about fees.



I also have access to a couple of retail feeds that I play with from time to time. The market data that I receive on the retail side vs the ATS side is completely the same in terms of content. There's no "differentiated access to data" despite the higher cost. It's exactly the opposite that you allege: it's actually unfair to us ATS traders that we're paying a higher fee for the exact same data that home traders are receiving.


maggtrading View Post
have better movement,

This seems highly subjective to what strategy you're running. Go pick whatever product you can find a profitable strategy on, but don't blame it on the exchange.


maggtrading View Post
reasonable capital requirements and are also cheaper than comparable cme products. anyway, i will still do as much research as possible on and give a lot of consideration to the products that other exchanges like kospi, hsi and japan exchange have on offer before making any decision, they could be even better than eurex's.

I like the guys at Eurex, HKEX and JPX too, I have much less faith in KRX. There's stuff these 3 do better than CME especially when it comes to trading rules or barriers to entry.

To be fair, they also have a tremendous advantage of not having paranoid, sociopolitically-motivated regulators barking at them all the time and our European friends on a whole seem more educated about the technological advances in the financial markets and don't attack their regulators on social media.

If you find what you want at Eurex, HKEX and JPX instead of CME, it seems you've thought carefully about your decision based on technical merit, so go ahead and grow your business and relationship with them. But I don't see any meaningful justification why you want to go to IEX.

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@maggtrading

1) The variable cost is not zero. Data centers, redundancy, backups, transmissions of data, technical expertise cost money. Larger volume increases costs both in terms of technology and salaried supervision. You need to make sure that you provide a stable environment as a matching engine and distribution of data. Their efforts (CME) in terms of technology as mentioned by @artemiso allow you to have millisecond execution as a retail trader.

2) I don't understand the counter party risk argument when it comes to limit order and stops? What does one have to with the other? "slippage" as this is the result of market depth at any given time.


3) Eurex capital requirements vs CME: estimated FDAX 24,000 Euro vs. $4,500 CME , so where did you get the "better capital" part? Please show me a comparison of Indices, Tresuries, etc. of contacts of with same liquidity and their perspective capital requirement in terms of margin. FDXM may built the liquidity it needs one day,but you cant bring it to this debate when you discuss the world's most liquid exchange.

4) You use HFT and Algo Trading interchangeably, they are not the same and do not have the same effect on the price.

5) As for cattle argument....and the CME "sabotaging" pricing..Let me remind you that the CME created 100-million dollar Family Farmer and Rancher Protection Fund when MF collapsed. Despite all arguments, I am having a hard time believing that the CME is working against those who use its products for hedging. When gold was at $200 an ounce, I bet many gold producers also complained.

Having said that, I can not argue with what you consider to be a better movement. This is where your risk tolerance, background and personal preferences play a role. I also like the Eurex, SGX, JPX and help many of my customers in this area in terms of execution.

As I said before, I truly believe that you may change your mind about the CME when you start moving from the theoretical/demo to practical/real. Limiting your choices based on misguided belief system will only hurt you as a trader in the long run. Many of the guys on this thread survived in this business, including myself, because they are practical and provide advice based on years of real experience not because we are shareholders of the CME.

Finally, I think that if we had a CME rep here, he would probably say
"This is not Let's Make a Deal, and I'm not Monty Hall!"
It is what it is.

Matt Z
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@maggtrading You think that their fees are excessive. There is nothing wrong with that, but the rest of the market does not. People trade at the CME because that is where the liquidity is. Because that is where the liquidity is, that is where people trade. It is circular, but that is the way markets work. So maybe I can provide a little background into why things are the way they are.

You are correct that equity commissions have moved lower because you have multiple exchanges and you are trading an equity, not a contract. A contract is not an equity, a contract is a created derivative and is centrally cleared by the clearing house and that is why it trades on the CME, their contracts are created by them. You do not have to trade on the CME. There is the OTC market and spot markets where you can trade. The derivative markets are much cheaper and efficient which is why people trade them.

A contract ( in practice ) will not be fungible across exchanges, so you won't have multiple exchanges trading the same contracts which would lower fees. ELX tried and they found out that no matter how much you want something to be fungible, the CME may disagree. You can Google "Exchange of Futures for Futures (EFF)" for more information.

There are a few firms that have gone up against the CME by charging lower fees and are not around anymore like the USFE. I still have an orange baseball cap from the U.S. Futures Exchange (USFE) I got right before they went under.

CME commissions are what the market will bear for the service that they provide. If it was too high, traders would move to a different market. If the commissions are too high for you, then you should trade somewhere else. The CME, after all, is a listed company and has a fiduciary responsibility to earn a return for its shareholders.

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i think owning the platform and trading US t-bonds you have the best commission and slip-age angle. the commission and slip-age are lower on bonds . but i have not looked at ever thing.. i always get charged out the.....for data and commission on anything out side the US by my broker AMP

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