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This kind of industry development and reaction is most interesting. I wish
we would see more of this kind of info in this forum. It seems quite hard
to come by.
Question...
If the CME loses its institutional spooz business because it goes to
trading the dow contract at the CBOT then what will they do? What
is their strategy? The IMM has thinned out; what's left? LC, LH, ???
The Board will have it all. And too bad for us because the rules and
orders at the CME are better for us than at CBOT.
It seems the industry is faced with two interesting problems that have
conflicting interests.
1. Huge quantities of institutional money find the futures markets almost
too limiting in their size and amount of regulation. Hence things like
currency trading have moved almost entirely to the cash forex markets and
places like the IMM has become thin. The exchanges aren't big enough here.
2. For individual traders the contracts like the spooz have gotten out of
hand. Unless you're very well heeled, you can't take that size of risk. So
the exchanges are too large, and thus they try to cut contract size.
Too small for big money; too big for small money. What's an exchange to do?
The size of big money is only growing. The size of small money becomes
smaller in comparison to larger markets. Are they getting stuck in the middle?
How are other exchanges handling it?
You can tell the OEX is non-institutional; just look at how ugly the
spreads are and how expensive it is to trade compared to the futures.
The only reason I'd consider using the OEX is because of its smaller
size relative to the similar futures.
Phil
PS: I didn't get any of those milk cartons!
THE DOCTOR wrote:
>
> Do you realize that splitting the S & P makes the CBOT Dow future much
> cheaper for the large institutional user. Are they kissing the
> institutional market goodbye. The OEX splits in or about November, but
> it has very little institutional business remaining. The SPX option
> stays the same.
>
> If you recall some months back I queried the forum on their view of the
> split and people were putting my photograph on Milk cartons.
>
> I just got back from Newq York this afternoon(Friday)and every
> institutional desk I visited was upset about the Merc split.
>
> Time to buy a CBOT seat?
>
> We certainly live in interesting times!!!
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