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Mark Brown wrote,
>Robert, will you members be getting any electronic trading equipment as part
>of the concessions for going totally electronic? If so will the electronic
>terminals be limited to distribution amongst the members? Do you see any of
>this as a benefit to your countries futures markets?
Mark, the conversion to screen trading will allow certain SFE members to
"workstation entitlements", that is, access to input trades directly into
the system. The type of members that get this "high level" access are:
- Floor Members (10 workstations each)
- Locals that trade (1 each)
- Persons leasing a local seat (1 each)
The workstations are supplied for free but extra terminals will cost more.
The SFE is also introducing an "AOEI" which stands for "Automatic Order
Entry Interface". This means that any member can create their own custom
made order routing system which connects directly to the SFE. This means
that you can literally create a program that electronically "shoots" orders
into the SFE rather than getting a person to manually enter the trade. As
the SFE states, "this will facilitate broader access to the market and more
efficient proprietary trading".
Clients of Floor Members can access the AOEI from outside Australia as long
as the Floor Member is satisifed that applicable regulations (if any)
within the relevant jurisdiction have been met.
Anyone in the world can become a SFE Local but before you can place a
terminal outside Australia you need SFE approval first. I do not know
whether any non-Australian Locals have been approved yet.
Floor members can place terminals outside Australia. Currently there are
already SFE terminals in New Zealand, UK, Hong Kong and Japan. The SFE is
only limited to relevant country jurisdiction.
Current Execution Fees:
=======================
SFE Execution fees are A$1.00 per side
Locals receive scratch and volume rebates.
New Electronic Structure
========================
Floor members pay A$0.90 per side
Locals pay A$0.40 per side for monthly volumes up to 24,999 sides
Locals pay A$0.30 per side for monthly volumes of 25,000 sides or more
Q: Do I see this as a benefit to Australia's futures markets?
A: In the long term, YES. Although the liquidity provided by the Locals
will reduce because not all of them will trade on the screen. The reduction
in liquidity from Locals will be offset from traders outside Australia
which will be able to route their own orders straight into the SFE system.
There are 2 jobs that will suffer when things go to screen. The first are
the locals. Most will probably open up delis or ice cream shops. I would
say probably half will stop trading and the other half will try the
"electronic" way of life. The floor memebrs who clear for locals are
setting up "workstations" (tables and chairs with petitions) and training
sessions to teach locals how to use a PC, how to input trades into the
screen, how to talk to a normal human being, etc, etc. The second job that
will suffer will the client advisors (alias CLOWN advisors). There will be
less of them as some clients will want to hook up directly to the AOEI.
Personally, I would want to continue to use my client advisor as I want to
pass on the EXECUTION RISK to my broker.
If someone uses the AOEI you end up with faster orders but you take on
EXECUTION RISK if you cock up your own orders.
Mark Brown wrote,
>which one of the below has the largest daily range?
>
> * Australian 90 day Bank bills ("bank bills" are the 90 day debt
securities issued by Aussie banks)
>
> * Commonwealth 3 yr bond (the Fed Govt 3 yr bond future, it's the most
liquid futures on the SFE)
>
> * Commonwealth 10 yr bond
>
> * Share Price Index or SPI (the stock index future to the Aussie All ords
>index)
Mark, I calculated the average daily range over the last 2 years, got the
tickvalue, & converted it to A$ as follows:
10 yr bonds = 8 points = A$560 approx.
3 yr bonds = 8-9 points = A240 to A$270 approx.
Bank bills = 6 points = A$150 approx.
SPI = 35 points = A$875
Just remember, the Aussie bills and bonds are quoted in terms of "YIELD"
which is different to the US T-Bond and US 10Y Note futures which are
quoted as a "BOND PRICE". This means that the tickvalue of these Aussie
contracts slowly change as yield moves up and down.
For those persons out there who are not familiar with bond pricing, this is
due to the non-linear relationship between price and yield. That is , the
dollar difference between a 1 basis point move in yield from 5.00% to 4.99%
is different to the dollar difference between a 1 basis point move in yield
from say 13.00% to 12.99%.
I hope this has helped shed some light on what is happening down here in
Australia. Remember, the same thing will happen in the USA sooner rather
than later. Get ready!
P.S. I just got the email re: Oz futures laws etc, I'll send another email
that addresses those issues later on.
/*/*/*/*/*/*/*/*/*/*/*/*/*/*
Robert J Bianchi - Director
Venitia Pty Ltd
Email : r.bianchi@xxxxxxxxx
Phone : 61-7-3899 9998
Fax : 61-7-3899 8605
/*/*/*/*/*/*/*/*/*/*/*/*/*/*
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