If I choose NOT to be a CME member in the course of opening a Live account with a Broker, will all these new CME rules be applicable to me ? Will the Broker insists that I divulge all these CME requested details ?
If you trade a CME market this information will be automatically sent in. These new rules are applicable to anyone trading CME markets. What is clear is that different brokerages/brokerage technology providers are approaching how this information is sent in different manners. In some cases, it will be transparent to the user (nothing for you to do) in others (Patsystems for example) the users needs to specify the country code in their account configuration.
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I still don't understand what that has to do with knowing the Country of origin per entry. I also do not understand what a flag indicating if orders were generated manually or via an automated process or application version information has to do with HFT as you can normally tell who is doing high frequency trading because of the "high frequency and amount of trades taken." It is not rocket science. I agree with Lolu: "The CME Group should just suspend their Individual membership qualification until they can devise a method which does NOT involve at least divulging my Platform version, and trade flagging." COuldn't put it better myself. Before you know it, banks will just be trading.
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I agree with @jstnbrg , the CME is doing everything it can to keep membership prices high. I think this has to do with making it easier for the audit department, and making operators of an ATS get CME memberships.
If you are an individual equity member and you are trading 24 hours a day, 7 days a week, you will get a call from the audit department. They will assume that there is more than one person and either you get more memberships or they start charging you the HIGHEST rates that would apply.
Memberships are needed for operators of ATS systems so if a CME member hired an execution trader, that trader would need the same membership level to continue to get the same rate.
As for origin, there are emerging market discounts that only apply if the firm and operators of an ATS are in certain countries.
Please forgive my simplicity in this matter. But is my understanding (so far) correct or even close?
I am only trying to understand the small Retail Trader view - not doing very well at that now.
1. All transactions (manual & auto) with the CME will have the new reg applied- what are the consequences of this change?
2. If I personally use an auto Strategy on NT or other platform, I somehow become "regulated" (not a good word to use) under this new reg. If so, what are the consequences of this?
3. Finally, if I use, say, manual chart trading (not auto strategy), on NT or other platform several times (i.e. 15 times during a twenty-four (24) hour period) trading a CME product, I somehow become "regulated" under this new reg. What are the consequences of this?
From the information I see on this thread (my perspective = could be totally wrong), I will have to apply for membership to the CME if I surpass some threshold. If so, what are the thresholds?
By the way, while most (not all) of the requested information is available now (different places and timeframes), just harder to piece together and would certaintly take longer to do so, how is this new reg that much different than the information flow now at the CME or broker/dealer?
This thread and reading the reg as it stands now, I am not sure just how this new reg effects the small Retail Trader.
I appreciate someone setting me straight, because I am really corn-fused.
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From my reading of the pdf, if you are not a CME member or paying member rates (because you work for a member who is theoretically the one placing the trades), there are no consequences for you, other than that CME will know whether your orders were generated manually or automatically. You are already paying fees at the highest level. If you are a CME member, you will need to prove to their satisfaction that if your orders were generated automatically, that this was not the result of a team effort, at least insofar as you are making ALL of the decisions about what strategies to use, and that you personally are the one sitting in front of the computer monitoring your trades. My understanding was that at their discretion, you may be able to use algo software you purchased from someone else.
This reg applies to algorithmically generated orders whether or not they are high frequency. It might apply to me (I'm a CBOT Member) if I use NT ATM strategies for targets and stops, even if I placed the original order manually.
The purpose of this regulation is not to regulate or restrict HFT or algo trading per se, but to make sure that the appropriate fee structure applies when a single Membership is being used by more than one person to trade. It is not aimed at the retail trader at all.
"You don't need a weatherman to know which way the wind blows..."
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