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> From: Eric <eric3@xxxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Re: FUTR- S&P Mini
> Date: Friday, August 15, 1997 4:30 PM
>
> Tom,
>
> I understand your concern on the stops since I plan to trade mini's on
> Globex (terminal in my office, luckily), but the stop situation is the
> same as other Globex markets. They expect the broker who accepts a
> Globex stop order to act just like a broker on the floor who accepts a
> stop order. You pay attention to the market and when the price is hit
> then you go to the market. This seems reasonable to me. A floor broker
> accepts this "risk" and only gets paid about $1 a contract.
Well, as an off floor broker I don't have the luxury of exchange rules to
cover my backside in fast markets or in situations where a customer
challenges a fill. I am operating under a different set of rules and
responsibilities than a floor broker. What may seem reasonable from the
perspective of the floor may be absolutely untenable to an off floor
broker. Having a different set of rules means I have a totally different
set of risks.
I am sure
> you are getting paid more, so you could certainly keep an eye on it.
> People off the floor often think that stops are this automatic thing
> that just gets filled when the market trades there, but in reality,
> people have to pay attention. They have dozens of orders in their decks
> and they are able to keep track.
> As a broker on Globex, you replace the pit broker, so that puts the onus
> on you.
Again, the biggest problem from my perspective as an off-floor broker is
not keeping track of the orders, it's the different set of rules, and
therefore risk, that I have concerns about.
When I traded APT on LIFFE, it worked the same way.
> I realize this is only 30 lots and under, but with the ability to see
> size at 10 price levels above or below a market, do you really want
> EVERYONE to know where your stops are??????
> You can place stops in the big SPOO pit also. I assume the mini is
> fungible with the big.
> My bigger concern is the .25 minimum tick size. With the extra costs
> there plus the extra commissions of trading the mini, I wonder if people
> are really going to trade it. If you are a 2 lot SPOO trader now, my
> understanding is with the new contracts, you have a choice of trading 4
> new big SPOO's in the pit or 20 mini's on Globex. What is the incentive
> to go to Globex???
That's what I'm trying to figure out, too. It is a great concept but if
they (the CME) have set it up so that the net costs are prohibitive, why
trade it? I admittedly don't know alll the rules regarding trading through
Globex, but I'm going to find out and will update the forum with another
post.
Regards,
Tom Alexander
>
> Eric Michaels
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