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In a message dated 2/17/99 11:42:50 AM Central Standard Time,
robert.cummings@xxxxxxxxxxxxxxxx writes:
<< Noway any human in between the buyer and seller is a time tax to ET that's
no longer affordable. Open outcry is no longer the fairness nor efficient
way to trade futures. All one needs to do is check time of execution in
stocks against futures its ridiculous. >>
******
Theory and reality. Theory, ET is faster and therefore better. Reality, open
out cry is dynamic and scalable (very important concepts not easily
reproduced) and has a proven track record. Reality, too many divergent
interests and risks to easily develop one universal trading platform. If you
are going to espouse the virtues and efficiency of electronic trading, then
you really need to get to one universal system for all exchanges and markets.
Having all these various systems and interfaces and exchanges to deal with
keeps costs too high as well.
The members of the Chicago exchanges can't even agree on how to reallocate
voting rights to reflect the importance of financial contracts at the
exchanges. The change that needs to take place must occur a little at a time,
an evolution, not a revolution or a coup. The Chicago Exchanges still have
too much political and economic clout to be out gunned on the political
battlefield. And it takes more than just the best system to win the market
share. See Apple Computers.
There will be pretenders, such as the CFFE, but they will not carry the day.
They claimed to be an electronic exchange, but you had to initially enter
orders by calling one of their clerks. They claimed they would have a full
electronic interface and matching system ready in 90 days from the time the
exchange was approved. We are still waiting, and waiting, and waiting.
My money is that the Chicago Exchanges are going to watch what is happening at
the LIFFE very carefully. The LIFFE is changing to a for-profit status and
will be mostly electronic trading. IMHO, the Chicago Exchanges have to figure
out a way to become for-profit entities before Electronic Trading will have
the full support, or majority support, of the membership behind it.
Regards,
John J. Lothian
Disclosure: Futures trading involves financial risk, lots of it!
Disclosure: John J. Lothian is the President of the Electronic Trading
Division of The Price Futures Group, Inc., an Introducing Broker.
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