CME Announcement: Mandatory Regulation?

March 17th, 2011, 08:51 PM

traderwerks

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.

Actually, I don't think the CME cares in the least about membership prices, I think they would prefer that the Memberships all go away. There are contractual reasons this is not likely to happen. What this is really about is the CME generating the highest level of clearing fee revenue possible from its order flow consistent with its rules. It stems from the fact that every trader standing in a futures pit had some sort of membership privilege, and was theoretically making all trading decisions and executing trades on his/her own. Order flow generated by nonmembers had a higher priced fee structure. In a HFT situation for sure and possibly in an algo situation, there is quite likely a team effort; nonmembers are involved in the decision making and possibly in the execution process. Under that scenario, the CME is claiming that a different fee structure applies, correctly in my (biased) opinion.

March 17th, 2011, 09:17 PM

Ryanb

Flag indicating if orders were generated manually or via an automated process

This is really pissing me off, at some point this info will land in to HFT-computers and will learn how to "trick" manual traders and systems.

London also has very liquid futures:
Euronext - [AUTOLINK]NYSE[/AUTOLINK] Liffe > Overview

I think that's what they do now.

But how will it land into HFT computers, unless they hack CME's computers or the FIX stream? The CME is an exchange, not a proprietary trader.

CME Announcement: Mandatory Regulation?

Discussion in Traders Hideout

CME Announcement: Mandatory Regulation?