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Becoming an Exchange Member (Leasing Seat)


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Becoming an Exchange Member (Leasing Seat)

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  #1 (permalink)
Fullerton, CA
 
 
Posts: 201 since Dec 2010
Thanks: 33 given, 98 received

Big Mike requested I start a thread on Exchange Memberships, so here it is.

I am seriously thinking about making this investment in my trading business because I believe it will significantly improve my profitability.

Becoming an Exchange Member entitles you to a huge savings IF you are a Successful Hi-Volume Trader. For example, non-member clear and exchange fees on E-mini indexes are $2.28 RT. The fee drops to $.92 for exchange members, a 40% savings. Savings can be higher or lower depending on which instruments are traded.

Exchange Memberships are available for all of the major Exchanges thru either the purchasing or leasing of an Exchange Seat. Most Members prefer to lease an Exchange Seat because they usually average approximately $1,000 / Month per Seat. Also, there are no Volume Quota Restrictions placed on you by either the Exchange or the Clearing Firm, so you can trade comfortably at your own pace. But your final decision should basically hinge on whether it is cost-effective for you or not? If your personal trading performance can exceed the cost of the Seat, then it would be practical. But if your personal trading performance cannot exceed the cost of the Seat, then it would just be an added expense that you don't need. Also, the Exchange requires a Non-Refundable $2,000 application fee which takes up to a month to approve. But they will allow you to lease a Seat immediately while you go thru the application process so you can start receiving your savings immediately.

You can learn more about Exchange Memberships at : http://www.cmegroup.com/company/membership/

And you can contact the Exchange Membership Dept. directly at : 312-435-3480

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  #2 (permalink)
 
 
Posts: 1,081 since May 2010

I know a big volume trader and he does NOT have a seat. He showed me the commissions he pays. He pays lower than half of what I pay.

It's even lower than the listed 'seat' prices. When I asked him why he doesn't have a seat he asked me promptly: Have you looked at my price level ? Why do I need to pay for a seat ?

Moral of the story: You don't need a seat to have even lower commissions.

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  #3 (permalink)
New Brunswick, NJ
 
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MetalTrade View Post
I know a big volume trader and he does NOT have a seat. He showed me the commissions he pays. He pays lower than half of what I pay.

It's even lower than the listed 'seat' prices. When I asked him why he doesn't have a seat he asked me promptly: Have you looked at my price level ? Why do I need to pay for a seat ?

Moral of the story: You don't need a seat to have even lower commissions.

Any high volume trader will get lower commissions than published commissions for small time traders. But if he had a seat, his commissions would have been even lower; even for a high volume trader. So, yes... you do need a seat for even lower comissions than without.

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  #4 (permalink)
 
 
Posts: 1,081 since May 2010


thatguy View Post
Any high volume trader will get lower commissions than published commissions for small time traders. But if he had a seat, his commissions would have been even lower; even for a high volume trader. So, yes... you do need a seat for even lower comissions than without.

Do you have a seat ? Do you trade +20.000 contracts a month ? He does, and he knows that he cannot lower his prices by having a seat.

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  #5 (permalink)
New Brunswick, NJ
 
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MetalTrade View Post
Do you have a seat ? Do you trade +20.000 contracts a month ? He does, and he knows that he cannot lower his prices by having a seat.

I don't need to trade 20000 contracts a month or a friend to know that having a seat will always beat not having a seat if you are a high volume trader. Your exchange fees are fixed. When you have a seat, they are lower. The rest of your commissions are brokerage fees. No matter how much discount you get from your broker, you will always pay the fixed fees.

I would be very interested to hear how your friend are able to pay lower exchange fees without having a seat?

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  #6 (permalink)
Szczecin
 
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thatguy View Post
I don't need to trade 20000 contracts a month or a friend to know that having a seat will always beat not having a seat if you are a high volume trader. Your exchange fees are fixed. When you have a seat, they are lower. The rest of your commissions are brokerage fees. No matter how much discount you get from your broker, you will always pay the fixed fees.

I would be very interested to hear how your friend are able to pay lower exchange fees without having a seat?

I would check the statements again. He probably pays "comission" that is lower - but does NOT include the exchange fees. If the broker lits up all items separately, then he may think he pays lower, but there is the second item with the exchange fees.

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  #7 (permalink)
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NetTecture View Post
I would check the statements again. He probably pays "comission" that is lower - but does NOT include the exchange fees. If the broker lits up all items separately, then he may think he pays lower, but there is the second item with the exchange fees.

Yes, exactly. Commissions are different than exchange fees. Regardless of how contracts you trade, you cannot get lower costs than with a seat. I don't know of a way how you can pay less than the stated fees and would still be very interested in how MetalTrade's friend does that.

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  #8 (permalink)
 
 
Posts: 1,081 since May 2010

It seems that with higher volume even without a seat you can get lower exchange fees.

That's the whole issue, people think they need a seat but in reality they don't.

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  #9 (permalink)
Site Administrator
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Just looking at Velocity's site, for NYMEX (an important difference), you can see that the lowest quoted commission for non-member is still higher than the highest quoted commission for member.

Crude Oil (Full Size) (CL) Commissions | Velocity Futures

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  #10 (permalink)
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This is just about fixed and variable costs

If exchange member -> higher fixed cost, lower variable cost

If no exchange member -> higher variable cost, lower fixed cost


At the moment I am happy with my ultra-low fixed cost approach, as it gives me some flexibility.

Or you may put it otherwise: I do not think that my trading volume is big enough to make up for the additional fixed cost.

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