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You are assuming 'bandwidth' only applies to communications bandwidth.
In this context, it has to refer to the entire real-time processing
stream. You can only process as much as the 'narrowest' part of the
system allows. That may or may not be the telecom link to the exchange.
Regards
DanG
qwerasdf12345 wrote:
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
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