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In a message dated 7/6/00 9:41:53 PM Central Daylight Time,
davestan@xxxxxxxxxx writes:
<< I can imagine a complete new generation of futures spread trading
based on single-stock to index futures, same-sector contracts, and
sector vs sector contracts.
Where will the CME's new profits come from? Higher exchange
fees to the trader? Same exchange fees but higher anticipated volume?
Cutting out middlemen? Are my commissions and fees soon to increase,
decrease, or be doled out to someone else?
dbs >>
**** Exchange quote fees are coming down. In fact the CME gives some quotes
away for free.
**** Exchange fees to the public probably will also come down.
**** Clearing fees, probably will come down too as more trade is
electronically based.
**** Members of the exchange, whose memberships will convert to floor trading
rights and different classes of stock, will pay no fees I believe. That will
probably help keep open outcry around a little longer.
**** I believe the introduction of single stock futures and the tremendous
growth potential there will trigger the demise of the small Introducing
Broker firm. Clients are going to want to trade futures, options and stocks
from the same account, from the same online interface. The public as
electronic market maker is an important force behind this. Only after the
public moves this way will the regulators be forced to merge the CFTC into
the SEC. This lag and the regulatory requirements to be both an IB and BD
will shut out the small IB from this emerging growth market and ultimately
lead to their demise, IMHO. The industry will restructure among smaller
technologically savvy FCM/Broker Dealers and huge FCMs already dabbling in
equities, IMHO. There will also be some large IBs, which are really FCM
equivalents.
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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