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.
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
Last edited by mattz; August 28th, 2016 at 12:07 PM.
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Re: alternatives to cme products with their obscene commissions?
@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.
Math. A gateway drug to reality.
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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