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Just a couple of thoughts about the Globex2 shutdown. First, I was at first
surprised that they did not switch to open outcry trading for the minis as
they have in the distant past. However, there are two factors which play a
significant role in this. The first is that there are not enough brokers.
Traders must declare at the beginning of the day if they are brokers today or
traders today, per the exchange rules. At least this my last understanding
of the dual trading rule. Thus, there is not a large pool of brokers to pull
from if trading switches to open outcry. Secondly, the CME has a lot more
experience troubleshooting the system than they did in those early days.
This showed a lot of confidence that they would get they system up and
running in short order. And they did.
Secondly, traders caught in the Globex2 mini S&P contracts could have used
the S&P 500 pit traded options to hedge themselves against the mini S&P, if
they really needed to be as flat as possible. As soon as they system was
back up and running, they could unwind the position. Luckily, the market did
not move that much during that timeframe.
Regards,
John J. Lothian
Disclosure: Futures trading involves financial risk, lots of it! John J.
Lothian is the President of the Electronic Trading Division of The Price
Futures Group, Inc., an Introducing Broker.
In a message dated 2/11/01 1:28:26 PM Central Standard Time, intel55@xxxxxxx
writes:
<< It was a mess. It was down fom 2:02 -2:45 and was screwing up many. They
talked about going open putcry, but not really. The last time I saw the
emini
go open outcry was a couple years ago. The funny thing is that many of the
mini traders have not been in the pit, they have always been on the machine
and those boys trading the naz on the machine did not really look like they
wanted to step into the lil crowded naz pit ...outtrades galore...just ask
CTF haha.. Oh well so much more volume is going through the machine now that
they are struggling to keep it tip top....oh well ...pits are still needed I
guess for a few more months...just have to get rid of the brokers... >>
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