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Dear Group,
As a result of the recent discussion of electronic order placement in
general and LeoWeb in particular, I recently opened a LeoWeb account, with
LFG. I regret, however, that, despite some of what I was told by my broker
(an affiliate of LFG) and by LFG itself, and what I understood from the
discussion here, LeoWeb has not lived up to my expectations --- perhaps my
expectations were too generous. In any event, I'd like to enumerate some of
my disappointments.
1. Segregated Accounts: I had understood from my broker that since it was
an affiliate of LFG (my broker is an IB using LFG as its FCM), I could
continue to trade my current account with that broker using LeoWeb. In
particular, what I wanted to do was to continue to place my "planned" entry
and exit price orders by phone to my broker (using direct floor access) but
to use LeoWeb to place my "unplanned" market exit orders by LeoWeb (I don't
use stop-loss orders). Wooops!!! LFG informed me that all LeoWeb orders
must be for exclusively LeoWeb segregated accounts. In other words, one
can't use LeoWeb to place orders for a traditional account cleared by LFG,
and one can't use one's usual broker (who is an IB for LFG) to place orders
for a LeoWeb account --- if you enter by LeoWeb, you must exit by LeoWeb
(except for their upstairs support phone service).
2. Limited Markets and Types of Orders: LeoWeb order entry is advantageous
(fast!!!) in those markets in which the order goes directly into the pit.
All other orders go to a terminal by the side of the pit, where the order is
printed out and run into the pit. Unfortunately, the only markets currently
served with direct to the pit orders are S&P, Corn, and Hogs. Furthermore,
the only types of orders in those markets that go directly to the pit are
Market, Limit, and Stop orders; all other orders go to the terminal and are
printed and run. Sounds good (when it's working) for the S&P. Any Corn or
Hog day-traders out there?
3. Procrustean Service: All orders can be executed only objectively.
LeoWeb does not allow one to give the broker any discretion in executing an
order, for example, by using DRT orders.
4. Down Time: In the past week, I've experienced times, sometimes hours
long, when LeoWeb has failed. No new entries can be placed (through
LeoWeb), and exit orders not already in the market must be made by telephone
to an upstairs broker, who then relays one's order by telephone to the
floor. Today, I got an E-mail from LFG stating that their filling clerk was
late to work --- all fills would be delayed by a half hour or more past the
open.
My limited experience with LeoWeb leaves me doubting that it provides much
advantage over a floor access telephone ordering system except possibly for
the S&P and that only for purely objective orders and during those times
when LeoWeb is not inoperable. I've gone back to my former method --- the
telephone.
For your information, I enclose an E-mail that I received from LFG about
their LeoWeb procedures.
Sincerely,
Richard Josslin
Received from LFG:
>S&P and E-Mini Rules
>
>S&Ps
>
>LFG routes orders in Top Step (front option) S&P futures to a broker
>operated workstation (CUBS) in the middle of the pit. This workstation
>only takes Market, Stop, and Limit orders. All other orders, such as
>Market on Close, Stop Limit, Stop Close Only, etc., are routed to a
>printer at the edge of the pit. This is important to know both in the
>time it takes to get an order into the pit and the time it takes to get
>information out of the pit.
>
>The TOPS/CUBS connection utilized by LFG is not perfect, and there may
>be times when the connection is unavailable. In this instance, the
>remaining orders are also routed to the edge of the pit and either
>flashed or run in for execution. While we will make a good faith effort
>to treat all orders with equal concern and attention, we cannot be held
>responsible for any interruptions to the system.
>
>There is NO GLOBEX CONNECTION for the S&P 500 futures.
>
>Traders in the S&P, Nasdaq, and Mexican Peso (which all require a 6
>digit price) should be aware that if the Order Type (like STP or MIT) is
>selected BEFORE the price is entered, inputting the 6th digit will force
>the Order Type back to the original default, or LMT. Traders who enter
>the price FIRST and then select the Order Type will not notice this
>situation.
>
>This condition has no impact on the PENDING screen, and users must
>remember that they are responsible to doulbe check the order PRIOR to
>transmission. This condition will be corrected in the next LeoWeb
>release.
>
>
>Cancel and Cancel/Replace Ticket Numbers
>
>Receipt of a ticket number (TOPS ID) is NOT a confirmation of an order
>being cancelled, but only an indication that LFG has received your
>request to cancel or cancel/replace a working order. A reasonable
>period of time is necessary to ensure that the order is removed from the
>executing broker's deck. A fill can be received for a cancelled order
>in a situation where the request to cancel is TOO LATE TO CANCEL, and in
>extreme conditions, such a report could come back significantly later
>than the original request to cancel. If you are not sure as to the
>status of a canceled order, please contact your support desk.
>
>E-Mini
>
>The E-mini contract is traded from 3:30 pm to 3:15 pm (Chicago Times)
>without interruption. The LEO system, through the Exchange's TOPS Route
>network, routes E-mini orders directly into the GLOBEX network, where
>trading occurs electronically.
>
>Globex is a trade matching system which requires the constant attention
>of the trader. This is because the system accepts only Limit orders.
>Even though the exchange has crafted a pseudo "market" order, their
>result is the possibility that a "market" order or "stop" could be
>"unable", especially during extreme conditions when such an "unable"
>would cause the most problems. Because of this, LFG determined that it
>was in the best interest of the firm and its customers to keep the
>system as simple as possible.
>
>For anyone entering orders in the E-Mini, all orders must be Limits,
>orders cannot be "blocked", and all orders die at the end of the trading
>day at 3:15.
>
>E-Mini orders are subject to the S&P "rules" for range, and during the
>8:15 to 8:30 period especially, GLOBEX will REJECT orders which are more
>than 700 points from the previous settlement (this is true for the whole
>GLOBEX system). GLOBEX will also REJECT orders which exceed the circuit
>breaker range then in effect. We have asked the CME to eliminate this
>restriction, but until they do, be advised.
>
>Leo, Leo-Win, and LeoWeb users can call for Leo Support during the
>evening and early morning sessions at [phone # omitted by RJ].
>Check with your Leo Support Desk as to what hours they will authorize
>your access to the system.
>
>Orders entered after 3:30 pm will work until filled, cancelled, or until
>the trading day ends at 3:15 pm. Orders entered between 3:15 and 3:20
>will be considered "too late, market closed", while orders entered after
>3:20 will begin working at 3:30..
>
>Please call your Leo Support Desk if you have any questions about the
>policies and procedures listed here. 9/16/97
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