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The electronic systems down time at LFG and the CME has been outrageous for
month after month (see below for this morning's notices from LFG), also my
TimberHill Workstation was down for 20 minutes due to apparent TH server
outage. On top of that we have futures brokers running TV and print ads
touting the speed and effectiveness of their electronic trading systems.
I've been writing to the CFTC markets division about these problems for
months and attaching samples of the huge file (well over a hundred) of
e-mail outage notices I've collected during the past several months. The
CFTC has been unresponsive - replies from the following individuals are
included below.
Braverman, Steve B. <sbraverman@xxxxxxxx> Associate Director, Division
of Trading and Markets
Wernow, Adam E. <awernow@xxxxxxxx Attorney-Advisor
It's time for concerted action to get rid of the bozos who can't keep the
electronic order systems running! This is hurting all of us because we will
all benefit from the success of electronic order entry and trading systems:
off-floor price discovery, reduced slippage, and faster fill reporting. I
urge members of this list to contact the CFTC. Further, the CFTC is
supervised by oversight committees of both the Senate and House so contact
your senators and representatives. It appears that the exchange members and
our brokers are unwilling or unable to fix these problems. It is the
off-floor traders who have the most to gain from good electronic systems. It
is up to us, the users of these systems who have our accounts at risk to
force solutions!
Earl Adamy
Enclosures: content of 4 e-mails
LFG bulletin 1/8 at 7:42am
------------------------------------
Thursday, January 6, 4:30 PM. LFG has made the determination at this time
to suspend the use of CUBS in the March S&P. We are hopeful that this
status will be short lived, but are unsure as to how long this condition
will continue.
We will notify you immediately of any change in status.
LFG bulletin 1/8 at 9:08am
------------------------------------
Please contact your support desk or your broker if you have any questions.
In the meantime, we encourage the use of trading in the E-Mini because of
its system's historically far greater degree of reliability, its 22 3/4
hour per day availability, and the speed of information exchanges, which
means fills reported in under 10 seconds.
There was a network disruption at the CME this morning at 9:18 am Chicago
time which has disrupted our networks. We are working to regain access at
this time. Please contact your support/order desk with any questions about
orders which you may have been trying to send during this disruption.
Further information will be forwarded as soon as its available.
CFTC response to first email - October 5
---------------------------------------------
Thank you for your email of today concerning trading in the E-Mini
contract on Globex. We are looking into the matter and will respond to
you as soon as possible.
Sincerely,
Stephen Braverman
Associate Director
Division of Trading and Markets
202-418-5490
CFTC follow-up response to October 5 email
-------------------------------------------------------------
Dear Mr. Adamy:
Thank you for your email dated October 5, 1998 regarding the
regulation of electronic order systems used by US futures exchanges. In
your letter, you indicated your concern regarding the frequency of
outages on particular systems used by the Chicago Mercantile Exchange
("CME") and LFG, LLP ("LFG"), a registered futures commission merchant.
Also, you asked whether the Commodity Futures Trading Commission
("Commission") monitored and regulated such systems and inquired as to
how the Commission could permit such systems to be operated in light of
their perceived technological deficiencies.
Under our regulatory framework, the Commission has oversight
over all US futures exchanges, which are required under the Commodity
Exchange Act ("Act") to be self-regulating. Accordingly, the
Commission's Division of Trading and Markets ("Division") reviews
exchange rules implementing the requirements of the Act and the
Commission's regulations. Also, the Commission's Office of Information
Resource Management ("OIRM") evaluates the integrity of proposed
electronic trading systems before their implementation by exchanges.
The Division also routinely monitors the development and implementation
of order routing systems used by the exchanges and by futures commission
merchants, commodity trading advisors, and introducing brokers. The
development of such systems in the futures industry is an ongoing
process and is in its early stages of development. By contrast, such
systems have been in use in securities trading for a significantly
longer period of time. Accordingly, the Commission's development of
policies and standards regarding the use of these systems is a work in
progress. The Division appreciates your comments regarding the LEO WEB
internet-based order routing system operated by LFG and the Globex
trading and CUBS fill reporting systems operated by CME, and will
consider your views as well as those of other members of the public and
of industry professionals as it continues its work in this regard.
If the Division can be of any further assistance to you in this
matter, please contact me either via electronic mail at
awernow@xxxxxxxx, or by telephone at (202) 418-5042.
Sincerely,
Adam E. Wernow
Attorney-Advisor
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