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That argument about bandwidth is spurious. One, bandwidth is getting
cheaper all the time, two, a single order cancellation is literally a
few bytes at most - the cost of transmitting it or taking it in is,
let's say:
100 bytes (being generous and including overhead)
= 800 bits.
A T1 line running at 1,544,000 bits/s costs about USD750/month in the
US. Let's use that as a benchmark. It handles 1,544,000 x 86,400 x
30 bits/month = 4 x 10^12 bits/month.
[800 / (4 x 10^12)] x USD750 = USD0.00000015 Seriously.
Given that cost, charging USD1.20 *must* be motivated by something
other than the desire to make a profit on comms alone.
--- In realtraders@xxxxxxxxxxxxxxx, Dan Goncharoff <TheGonch@xxxx>
wrote:
> The issue for the exchanges is purely a technical one. Bandwidth is
a
> major fixed expense. Constant updating of prices for far OTM
options
> that don't trade takes as much bandwidth as updates for ATMs. All
> traders would have to be penalized to pay for the construction of
more
> bandwidth. Instead, the exchange has taxed bandwidth use, which
will hit
> hardest those who use bandwidth excessively.
>
> That said, I think I already made the observation in a previous
message
> that Eurex, which I am closer to, only taxes bandwidth use above a
> 'normal' amount, which means the typical retail customer never sees
it.
> The tax being charged in the US seems to apply to every update, and
so
> is penalizing those who did not cause the problem, which does look
unfair.
>
> Regards
> DanG
>
> Terry B. Rhodes wrote:
>
> >I'm a little slow, so correct me if I'm wrong, but
> >correctly interpreted this really means... ...Firms were
> >adding liquidity, cutting into our spreads (to the benefit
> >of retail customers), so we all got together and decided
> >to penalize them with a tax instead of via true competition.
> >
> >Sounds like the SOES battle all over again.
> >
> >It seems especially wrong that the ISE is taking part in
> >this. In the past I've always routed my orders to them as
> >a sign of support. This will no longer be true.
> >
> >regards,
> >
> >tbr
> >
> >
> >
> >>From: Mano Appapillai <manoappapillai@xxxx>
> >>Subject: Re: Option order cancellation fees
> >>
> >>Here is the response from a person closer to the Exchanges :
> >>
> >>
> > >
> >
> >
> >>There were some firms that where sending thousands of orders
> >>per second and then cancel and replacing them with a slight move
of the underlying.
> >>They were essentially trying to act as market makers. This not
only ties up the resources of the exchange,
> >>but also of the brokerage firms and ISVs. Just think of all the
option classes and strike prices they
> >>would constantly readjust and you can imagine the order flow
without any revenue generating trading occurring.
> >>
> >>
> >>Mano Appapillai
> >>
> >>4565 Saddle Mountain Ct
> >>
> >>San Diego, CA 92130
> >>
> >>Tel : 858 794 8494
> >>
> >>
> >>
> >
> >
> >
> >To unsubscribe from this group, send an email to:
> >realtraders-unsubscribe@xxxxxxxxxxxxxxx
> >
> >
> >
> >Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> >
> >
> >
> >
> >
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