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New CME fees on multiple platforms?


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New CME fees on multiple platforms?

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  #31 (permalink)
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DavidHP View Post
Thanks for the reply.
However, this is not being untruthful.
Unless something has changed, the regulations allow non-professional traders to trade up to 15 'friends and family' accounts without being classified as a professional.

Yes, but on these 15 accounts you must have a POA.

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  #32 (permalink)
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kronie View Post
Instead of just clicking on the "thank you button", I thought to both tank you(s) in written form, and encourage you to contribute more, and never feel such is not worth our time....

we all benefit, and your comment, proved my point, although it took a few moves on the chess board to accomplish...

the publically traded exchanges have the ability to launch bonds easier than before going publically traded, so any budgetary or long term financing issues would be addressed. I remember learning how IBM taught that lesson to the business community by launching 100 year bonds at some of the most attractive interest rates imagineable. The exchanges not only generate tons of positive cash flow, they also sell services (co-location and other priority services), as well as training sessions, books and exclusive access to their facilities (whether on tours, books or multi-media formats). They create money well beyond their core products, such that they could offer rebates to active customer accounts as a way of encouraging growth amongst those sophisticated retail trading public, instead of finding a way to chase away both active and inactive account holders and consumers of their live data feeds...

just a thought....

Thank you for this post and I happy to hear that my added perspective is of value.
Above all, I don't want to give the impression that I don't care about cost, and the little guy, because this is not what I stand for. But, the only argument that I hear is that the exchanges are greedy, they make enough money, etc This is not a valid economic argument in my eyes.

Let's address things that pertain to us:
1) The cost of technology and data distribution
2) The traders who simply do not trade. They engage in research, programming, analysis, etc
I personally believe that between FCMs, IBs, etc there are tens of thousand of these. I cant imagine that this data distribution is just free and expected to get free forever while such users exist.

CME does offer individual and corporate memberships. Here is a balancing act where the CME is trying to help those who trade and add liquidity. You can have your CME fees lowered if you do sufficient volume.
We are actually helping customers with such applications nowadays, and in my opinion they are reasonable as far as cost.

This is a hot topic, and I do appreciate the different perspectives here. I agree that such discussions could be useful, because I see the retail perspective, and I hope you guys see new perspectives you did not consider before.

Let me end this on a good note, and say that I will do my best to address such things when I do talk to the CME.
If I believe that circumstances require a further consideration, I will point it out.
Whether I will have influence is a different story, but I will try my best.
If anything just to say to myself that I tried for you guys.

Matt

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  #33 (permalink)
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mattz View Post
Let's address things that pertain to us:
1) The cost of technology and data distribution
2) The traders who simply do not trade. They engage in research, programming, analysis, etc
I personally believe that between FCMs, IBs, etc there are tens of thousand of these. I cant imagine that this data distribution is just free and expected to get free forever while such users exist.

There's a difference in the cost of the data ditribution by the CME, and the cost of the distribution by the intermediaries. CME obviously has a cost of data distribution and I believe that CME can and do charge anybody who connects to them for such data. If you and other brokers decide to pass on that fee, that is your choice. What CME is doing here though is charging a licensing fee for anybody who sees that data whether they (the CME) have a cost of providing it to them or not.

mattz View Post
CME does offer individual and corporate memberships. Here is a balancing act where the CME is trying to help those who trade and add liquidity. You can have your CME fees lowered if you do sufficient volume. We are actually helping customers with such applications nowadays, and in my opinion they are reasonable as far as cost.

The one thing to be careful of with individual exchange membership is that under IRS Section 1402(i) it can make traders subject to self employment tax on their trading earnings. Depending on your tax situation this could be significant or insignificant. I'm not an accountant though so would advise others to consult with their accountant.

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  #34 (permalink)
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SMCJB View Post
If you and other brokers decide to pass on that fee, that is your choice.

I am not sure about the mechanics of this, but we cant absorb such costs.

Matt

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SMCJB View Post
There's a difference in the cost of the data ditribution by the CME, and the cost of the distribution by the intermediaries. CME obviously has a cost of data distribution and I believe that CME can and do charge anybody who connects to them for such data. If you and other brokers decide to pass on that fee, that is your choice. What CME is doing here though is charging a licensing fee for anybody who sees that data whether they (the CME) have a cost of providing it to them or not.
The one thing to be careful of with individual exchange membership is that under IRS Section 1402(i) it can make traders subject to self employment tax on their trading earnings. Depending on your tax situation this could be significant or insignificant. I'm not an accountant though so would advise others to consult with their accountant.

Even for an individual Futures trading profits are taxed as hybrid rate of capital gains / income. It is a 60/40 split that creates a 28% blended tax rate. So it doesn't matter whether the CME classifies you, the IRS already has a system to tax it.

Again, talk to an accountant to be sure.

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SMCJB View Post
There's a difference in the cost of the data ditribution by the CME, and the cost of the distribution by the intermediaries. CME obviously has a cost of data distribution and I believe that CME can and do charge anybody who connects to them for such data. If you and other brokers decide to pass on that fee, that is your choice. What CME is doing here though is charging a licensing fee for anybody who sees that data whether they (the CME) have a cost of providing it to them or not.


mattz View Post
I am not sure about the mechanics of this, but we cant absorb such costs.
Matt

Sorry Matt I should have made my point clearer. I wasn't in anyway implying that clearers should absorb these new data fees. My point was that you can't argue that data distribution has a cost and this is just that cost being passed on.

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SMCJB View Post
CME obviously has a cost of data distribution and I believe that CME can and do charge anybody who connects to them for such data. If you and other brokers decide to pass on that fee, that is your choice.


SMCJB View Post
Sorry Matt I should have made my point clearer. I wasn't in anyway implying that clearers should absorb these new data fees. My point was that you can't argue that data distribution has a cost and this is just that cost being passed on.

To be clear, the gateway provider is the licensed distributor and this is not necessarily/usually the same party as the clearing firm/IB.

In @mattz's defense, it's unusual for the distributor, nor the clearing firm/IB, to bear the license/distribution/user fees. In fact, it is usually passed on with a middleman's margin.

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mattz View Post
Yes, but on these 15 accounts you must have a POA.

@mattz do you know if the CME rule changes affect on all brokers?

i.e. I was told that anyone trading more than two accounts via a POA will be considered a professional?

(I've been told by some brokers that they have not heard of the change and it has not affected their traders)

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DavidHP View Post
@mattz do you know if the CME rule changes affect on all brokers?

i.e. I was told that anyone trading more than two accounts via a POA will be considered a professional?

(I've been told by some brokers that they have not heard of the change and it has not affected their traders)

In our industry "brokers" have different level of experience and access to information.
As far as I know, you would be considered a professional if you have a POA unless it is a spouse.
BUT, why not reach out to the CME Market Data support? https://www.cmegroup.com/market-data/
Gather all your questions, and talk to these guys. They are the ones who make the rules and enforce them.

Matt

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