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John,
Removing the limits has helped level the playing field in one respect but
exacerbated the inequality of having 10 ticks in the pit and only 4 in the
emini.
Since the limits were removed last year, the emini S&P has extended periods
where the Bids and Offers are out of all proportion to what is actually
being traded. It seems that this is what has caused the very narrow ranges
where the market doesn't move for hours. During these times, the S&P is
almost catatonic and certainly not 'off to the races'.
Of course if you are arbing the mini vs the pit, it's paradise - but I can't
see how it can ever be considered a level playing field for intraday traders
while this difference remains.
If the CBOT don't do that with the Dow, it would provide a serious
alternative.
Rgds,
Kim
----- Original Message -----
From: <I4Lothian@xxxxxxx>
To: <fritz@xxxxxxxx>; <omega-list@xxxxxxxxxx>
Sent: Tuesday, March 26, 2002 12:23 PM
Subject: Re: New Dow Complex Structure at the CBOT
> Gary:
>
> There are many factors that have led to the current success of the emini
S&P
> contract. I don't think you can pin the growth rate of the contract on
the
> size limits alone. For example, it was only two years ago the CME opened
up
> their APIs to allow for more firms to broadcast price data in their front
end
> trading platforms.
>
> It was only a short time before that the law was changed allowing the
> European ISVs to come over to the U.S. and offer connectivity to Eurex and
> LIFFE, and thus the U.S. markets.
>
> Additionally, there has been a trend for stock traders to start trading
the
> emini S&P as a way to get around day trading rules on the stock side.
>
> So there are lots of reasons for the success, especially the recent growth
of
> the contract.
>
> As for the big S&P, I don't think that will be listed electronically just
> yet. The CME is experiencing too much success with the current format to
> have reason to fix something that does not seem to be broken. But I am
sure
> it will happen in time.
>
> Regards,
>
> John J. Lothian
>
> Disclosure: Futures trading involves financial risk, lots of it! John J.
> Lothian is the President of the Electronic Trading Division of The Price
> Futures Group, Inc.
>
> In a message dated 3/26/2002 10:37:48 AM Central Standard Time,
> fritz@xxxxxxxx writes:
>
> << How level will it be, really? Will the electronic SP be emasculated
> the same way the ES was at first, or will it be a totally open market?
>
> > I am a firm believer in letting the market decide which is the
> > best format.
>
> Me too. But it DOES require a level playing field. The ES got off
> to a much slower start than it should have. Once they took off the
> size limits, it was off to the races. I hope they're smart enough to
> not make that mistake again.
>
> Gary
> >>
>
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