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In a message dated 2/17/99 12:05:46 PM Central Standard Time,
sptradr@xxxxxxxxx writes:
<< I think the current "brokerage house" options for futures electronic
trading suck. For my time and money, Globex ETP's are the way to go now,
thus cutting the brokerages out of the loop. Get a permit, $25K T-bill,
clearing firm, and terminal and you're ready to trade anywhere in the world
(says CME). And when the system crap outs now and then, then phone the pit
to fire off your orders. Can't get any simpler than that!!!
******* Getting a Globex Electronic Trading Permit is certainly an option.
But, it is an expensive option. Much of the success of the E-mini has come
from lowering the entry costs for trading. Lower contract size, free quotes,
Internet access and low commissions, not to mention one of the most active
stock markets ever have all been factors. The CBOT has tried to launch the
CBB and wants $4000 (or something close) to have a direct connection to this
cash bond trading system. Is not going to work.
******** Another thing, even if you are a Globex ETP member, you need a
brokerage firm. Yes, you can go to some clearing firms and get great rates.
But, this part of the business is very small. I don't know that the clearing
firms are accurately gauging their risks, or the cost of taking those risks,
because this is an underdeveloped segment. Volume and competition will help
answer that.
I imagine this broker guy is thinking in terms of those stupid handheld TH
devices. Give me a break. That's as much electronic as a floor clerk
signaling in your order via hand signals after reading your orders from a
pitside printer.
'
****** This broker guy :-) , is thinking of the competition for order routing
for the trading floor. The CME is putting a lot of effort into CUBS2.
Despite the early problems, they could have an outstanding tool before long.
They plan to deploy 200 CUBS2 terminals by the end of 1999. There is a
product called Deckmaster that is being tested by some floor brokers. The
Timber Hill product is another one that is in the running. (Disclosure: My
operation offers the TH product.) The exchanges have greater resources,
access and clout than the competition, but this is a developing market ripe
for some competition.
I foresee Globex (or something similar) and pits trading side by side for
quite some time...pure electronic (sans handheld devices and hand signaling
floor clerks) and pure open outcry coexisting in some sort of symbiotic
relationship...the best of both worlds.
TH >>
******* I think you are right about the value of the open outcry and the ET
markets existing together. That is part of the evolution that is currently
taking place. However, there open outcry is being electronically augmented
already. The hand held devices or ones on pedistals, the clerks on headsets
in the pits and such are all part of it.
******* If I used a little imagination (OK, a lot of imagination), I could
forsee open outcry traders with laser sites on their foreheads (hats) which
would read the other brokers badge and trade information. Could certainly cut
down on outtrades and increase the audit trail accuracy. Of course, it will
take a new younger generation of traders to embrace these types of tools and
to make them work.
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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