|
PureBytes Links
Trading Reference Links
|
Great discussion all....
re: "Secondly, single stock futures pose a risk to the specialists on the
NYSE. It has always amazed me that part of what the specialists do is legal
in the securities industry, but in the futures industry will get you sent to
jail."
Have you seen some of the valuation numbers published from mergers of these
specialist firms ? WOW - these outfits are cleaning up.....at stock/options
traders' expense I'm afraid.
re: "There will be lots of ways for the U.S. exchanges and regulators to
screw this up yet."
Especially if BOTH SEC and CFTC are getting involved....talk about
regulatory "overkill" !!
> -----Original Message-----
> From: I4Lothian@xxxxxxx [mailto:I4Lothian@xxxxxxx]
> Sent: Monday, February 19, 2001 12:54 AM
> To: omega-list@xxxxxxxxxx
> Subject: Re: stocks suck...electronic futures "rule"-margin requirements
>
>
> In a message dated 2/18/01 11:10:52 PM Central Standard Time,
> robert.cummings@xxxxxxxxxxxxxxxx writes:
>
> << I wondered about the validity of the a 50% margin requirement
> statement.
> I
> assumed it was an error.
>
> ***** Everything I have read says the futures community agreed to let the
> margins be set by the Fed, as it is with stocks. I believe that rate is
> currently 50%. That is not to say that it can't be lowered in
> the future,
> especially if the U.S. sees trading volume move to overseas venues.
>
> The poster must have gotten confused with sec rules regarding
> securities.
> Of course this instrument is not a security but a futures contract.
>
> ***** The reauthorization law for the CFTC included an agreement
> between the
> CFTC and SEC to jointly regulate single stock futures. Thus, the
> SEC will be
> involved.
>
> But anything is possible if the sec wants to be apart of the regulatory
> body
> overseeing it.
>
> ***** The SEC would like to take over the CFTC. But this is not
> about what
> the SEC wants. It is what the securities industry wants relative
> to what the
> futures industry wants in context to the competition they both face,
> especially from abroad.
>
> I agree if a 50% margin turns out to be the requirement then why
> have it? The
> ability to sell it without an uptick or borrow the stock would be
> the only
> advantage.
>
> ***** Why do futures need a margin advantage to be viable. I
> think there are
> several features which make them viable. First is I believe single stock
> futures will be a leading indicator. Yes, ECNS give fast fills.
> They are
> essentially futures matching engines in the making. But the movement in
> stocks is towards a single central order book. The Supermontage
> proposal is
> supposed to facilitate that. However, which will be faster, an
> order routed
> to an ECN, then the Supermontage, or an order sent to one central
> order book
> at the futures exchange. Just like eminis became a leading
> indicator to the
> S&P pit, I think single stock futures could become a leading indicator to
> stocks. Secondly, single stock futures pose a risk to the
> specialists on the
> NYSE. It has always amazed me that part of what the specialists
> do is legal
> in the securities industry, but in the futures industry will get
> you sent to
> jail. Single stock futures will go a long way towards leveling
> the playing
> field for stock traders, just like ECNs have done to a certain extent.
> Thirdly, there is no payment for order flow. Tell me the one
> again about how
> the firm being paid for you orders has your best interests at heart.
> Fourthly, stocks are universally settled. Thus a trade in a single stock
> futures ultimately leads to delivery of the stock, if you want.
> So it really
> does no matter where you trade, you can ultimately offset the
> trade easily.
>
> Why were the options exchanges able to make multiple listing of
> stock options
> work? For one, they all offset at the same clearing
> organization, the OCC.
> If you don't have to worry about the ongoing liquidity in the
> market you made
> the trade, because you can offset it elsewhere at the best
> available price
> then, then more people will be willing to take a chance on an
> illiquid market
> presenting them an opportunity now.
>
> There are lots more reasons, but don't get me really started. :-) Of
> course, all of this is a rhetorical question at this point, as
> they don't yet
> exist in the U.S. There will be lots of ways for the U.S. exchanges and
> regulators to screw this up yet.
>
> Regards,
>
> John J. Lothian
>
> Disclosure: Futures trading involves financial risk, lots of it!
>
>
> The foreign futures exchanges have
> futures contracts written on a select number of US stocks now. I
> don't know
> if trading has commenced yet nor what margins they have in place
> for them.
> Only US citizens can not trade them.
>
> Robert
> >>
>
|