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In a message dated 4/9/99 12:52:08 PM Central Daylight Time,
warlord@xxxxxxxxxxxxxxxxxxxx writes:
<< Hi,
Not a flame, just that I need my opinion to get reality check everynow and
then.
I would look to the Matif incident to set the example.
Electronic vs outcry side by side without any restriction on size on the
electronic system, poor pit, they can trade by themselves. I can see where
the big SP will be if more than 30 lots can be transacted on the Eminis.
****** I don't think you help either one of them (S&P and E-mini) if you
change the mix of things dramatically. The E-mini has a symbiotic
relationship with the S&P. To favor one over the other would hurt total
volume in both of them.
A lot smaller than where it is already now. I think exchanges should focus
their energies along the lines of LIFFE Connect. Jump dump the pit and watch
volume grow like with the Bunds, now the meanest biggest baddest contract the
world has ever seen, and focus on getting more people all over the world to
trade
your contracts and make the systems better. ADT says the Eurex interfaces
and network speed is superb cross Europe amd better than Globex2.
***** All of that is easier said than done. The Chicago exchanges, IMHO, are
going to attempt to augment open outcry the best they can. The e-mini has
provided additional spread/arb opportunity for S&P traders. The HHUs will
only improve that once they are deployed in the S&P pit. (I don't know of
any date for that, but assume it is in the works). The biggest headaches
this week have come from hardware and software problems with the E-mini S&P
and the TOPS gateway to Globex2. Everytime that happens, open outcry gets
renewed and deserving respect.
I would think that HUUs would mean is that electronic terminals are going
to get smaller. Terminals for trading need not be a PC. I think it be faster
to
enter orders using a stylus type of pen.
**** Actually, the CUBS2 terminals are pen based laptops. The problem I see
with this is that is a niche market so the machines being offered often lag
in terms of power and features.
Trading terminals should have touch screens. Touch touch touch, I am long or
short or out.
***** I have seen some touch screens and the biggest problem I saw was having
to switch from screen to screen to input all the information. One's finger
is a much bigger pointer than a curser and you need a big enough target on
the touch screen to avoid touching more than you intended. This means that
you can't get quite as much information and choices on a touch screen as you
can on mouse or been based system.
Given liquidity will flow thru the electronic system, soon enough they will
be stools at the pit so people can sit down while they look at their HUUs.
This will be sure more sociable than in most trading rooms setups. And people
could come in and sell hot-dogs, as the traders sit on their stools, point
away with the stylus pens.
***** There are already hot dogs in the pits. And some beefy jerks. :-) No
comment on trader's stools.
There should be little effect on liquidity unless they can beat the spread for
1 lag on the spot market. Most of the retail people at my clearing firm trade
the spot. You can get a machine at home with Comstock spot quotes for
SGD250 or about USD150 with live AFX.
**** One of the things that makes a successful market is the proximity and
ease of laying off risk on related markets, i.e., spreading. One reason the
E-mini has been more successful than the Dow is that the CBOT did not get the
Dow transports or utility contracts. With successful contracts in those
contracts nearby volume in the Dow industrial futures would be much greater,
IMHO.
I have a question. CME Globex locals can trade Matif products. How much
do they pay for this right?
***** That will vary from firm to firm. I have had some prospects interested
in getting Globex2 terminal and they have eventually signed up with local
trading group at firms handling floor traders, rather than with my operation.
The rates they were able to negotiate were pretty darn cheap and comparable
to floor rates.
Appreciate the update.
>>
***** You are welcome.
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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