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> From: Eric <eric3@xxxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Re: FUTR- S&P Mini
> Date: Monday, August 18, 1997 9:28 AM
>
> Rick_Ratchford wrote:
>
> > Eric,
> >
> > I think there is a big difference from a floor broker watching for
stops
> > and those off the floor like Mr. Alexander. Although undoubtledly he is
> > a good broker and could watch markets for his clients, he still is NOT
> > on the floor. That difference when it comes to stops can be a big
> > difference in fills.
> >
> > :)
> > rick
> >
>
> Rick and Tom,
>
> I was under the impression Tom did have direct access to a Globex term.
> Regardless, on Globex (except for the new mini) there is no floor to be
> on, so yes, I believe sitting at a Globex term is VERY similar to being
> on the floor in the pit. You get to see size, you get to see each trade
> happen in real time, and you get to execute your own orders. You are in
> the virtual pit. What is the difference??
Well, upon checking with the Globex Services department at the CME it
appears that they don't allow IB's to have the Globex Terminals. I was
informed that one either had to be an exchange member or a CTA. It was
offered to CTA's in an attempt to encourage more volume on Globex.
So, what the CME has created is a product to appeal to the public, but at
the same time is denying access to the device over which the product is
designed to trade to the very people expected to market the product. The
gentleman I spoke with at Globex Services agreed this didn't seem to make
sense and he promised to do some checking and get back with me.
What seems to me to be occurring is that the CME is trying to increase
volume on Globex by not allowing any other means by which to trade the
mini. Ironically, as of now they appear to be denying access to the Globex
terminals which is certainly not going to help accomplish what appears to
be their goals of increasing volume and creating a successful new product.
The difference might be that
> your primary job is opening more accounts rather than filling stop
> orders and so it is a waste of your time, but that doesn't change the
> fact that the execution process is very similar.
Eric, taking care of my customers is my number one priority and is never
"a waste of my time".
> As for the "rules" Tom, you're right you don't have fast market rules to
> protect you,
Let's not downplay the importance and implication of the floor's fast
market rules which is a HUGE advantage in terms of managing risk (from the
floors perspective) that I don't have.
>but you also aren't "held" to a price.
Neither is the floor except on limit orders. The floor certainly isn't
"held" to price in a fast market.
What rules are
> there that require you to give a price on a stop??
Being within the technical constraints of the rules doesn't necessarily
make for a desirable situation for the customer.
As both a former
> off-floor broker and a former floor trader, I believe that the off floor
> broker actually has more leeway and fewer rules to contend with
> regarding fills.
The differences in the responsibilities and regulatory controls under which
off floor brokers and floor brokers operate are VERY significant. One can't
just all of a sudden start "simulating" a floor type of enviroment as an
off the floor broker.
> Also, Tom, what about placing stops in the big pit as I mentioned??(at a
> 1-5 ratio)
I am not allowed to "bundle" orders as you as a CTA can do. Plus, it would
be impractical because you would be dealing with numerous accounts with
orders in different quantities at different price levels. The hedge ratio
could never be exact. Then you would have the problem of trying to
reconcile the trades in numerous accounts. However, all of that is moot
because the NFA wouldn't allow it.
> Tom, as far as the terminal, I am a CTA so I get a different deal than
> you might; but I believe it is $900 to install (depending on location)
> and $800 per month. You may also need an ETH (electronic trading hours)
> permit to input trades directly.
I'm looking into it, see above.
> Ok, now, question for you. As a "retail" broker, do you plan to charge
> different commission rates for the mini vs the big SPOO?
No, unless I incur a different set of costs from my end.
Are your
> clients interested in trading the mini on Globex??
Yes, they are. It can be a great contract. However, I'm going to have a
difficult time encouraging it until some of the details are resolved.
Regards,
Tom Alexander
>
> Eric
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