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John,
> ****** The limits have not been removed, they have only been expanded.
And
> expanding the limits to the modest 250 contracts has presented some
> technological challenges that the CME is meeting head on. When you have a
> 250 lot that is filled a few contracts at a time, or a bid for a
cumulative
> 250 contracts that is hit and filled, it creates an excess of messages
> through the host that slows things down. The CME has had to put in some
> adjustments to handle this. So even if the CME wanted to take the size
> limits off completely, that would not necessarily be a good thing.
Doesn't increasing the limit reduce the number of messages rather than
increase them?
Entering 8 Bids - 30 at a time results in more messages being transmitted to
update the Total Bid than just one entry of 240.
Similarly, the trader who wants 240 is filled with less transactions being
transmitted.
I capture every trade on Globex and I see the total volume traded has
increased but there is no great increase in transaction volume.
What increase there is maybe due more to the rise in popularity of the emini
and availability of new platforms etc. than by the limits being raised.
> ****** I actually think the difference in the ticks between the pit and
the
> screen is part of the genius of the emini and its ecosystem.
LOL - If you kept a straight face when you wrote that, you're a genius :-).
> ****** And I am not sure there is such a thing as a level playing field.
> There is a more level playing field, but not a level playing field.
> Actually, if you ever see a football field or baseball field they are not
> level. They are pitched one way or the other to help with drainage. So
> actually the cliche we use does not describe that which we think it does.
> The members of the exchange will always enjoy some advantage, be it
margins,
> fees or otherwise.
Level - More level - Whatever - but it only takes the will to change to get
more level than 4 and 10.
I doubt that will is there.
> 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'.
>
> ****** Sometimes markets move sideways. I don't think you should blame
the
> messenger for this. The CBOT sees higher a/c/e volumes during slow times
and
> higher pit volumes when volatility increases. The market participants are
> just expressing their preference for different venues under different
> conditions.
I don't dispute that but the difference since the limit was raised has been
marked.
I wasn't blaming a messenger either - just suggesting that there may be room
for improvement for the CBOT to exploit - should it be so inclined.
> 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.
>
> ******* The arbing versus the pit is a very important part of the market
> being as tight as it is. That tight market and the information in the
book
> that is displayed goes a long way towards leveling the playing field from
> what we had pre-emini.
Again, I don't dispute what you say - I was referring to the market after
the limit was raised - not pre-emini.
It wasn't this tight for such extended periods of time before the limits
were raised.
> ******* I like trading the eminis more than trading the pit. Of course
> because I am broker people will say that is because of the extra
commissions.
> That must be factored in. But I think the order flow efficiency of the
> eminis, the surety of being filled, the control over the process and the
> speed with which you can make decisions and change decisions actually
favors
> the emini trader over the outside trader trading the big S&P. So you
could
> say that we should start trading side by side with the big S&P and maybe
we
> will soon. The CME is looking at that. But right now that would be
fixing
> something that is not necessarily broke.
That would be great. I hope they do because all the advantages that you
listed things would still be true.
There is no need to wait for it to break.
By the time it's broke, it's too late and you find yourself trying to get
your crown back - as the Bond market discovered.
> ******* I think the Dow complex will grow in popularity with this new mix
of
> products. I am not sure it accomplishes your goals, but it is a process
and
> maybe we will get there.
All I seek is opportunity. The more, the better.
Fortunately, there is plenty of that elsewhere in other (overseas) markets
but I'd like to see the CBOT provide stiffer competition to the Merc's Index
products.
I have always believed that the CBOT has a great opportunity with a Dow
contract.
Despite the spreads, I find the Dow, even now, to be tradeable because it
has some great moves but it is too thin to trade any size.
I have my doubts whether $10/$5/$2 really makes much difference.
A $10-$15 tick value is the sweet spot for the retail market and they
already have that now.
No - sadly, their marketing and promotion has been dreadful and I think that
is responsible for the lack of interest/liquidity.
The fact that seasoned traders are unaware that it is even traded
electronically is a testament to that.
As you said John, it is a process and I hope you're right that the CBOT can
get there.
Rgds,
Kim
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