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In a message dated 1/5/01 1:01:12 PM Central Standard Time,
joeduffy@xxxxxxxxx writes:
<< John, you are largely arguing the semantics of laguage here, rather then
information. My clarified replies are highlighted by the two sandwiched
=======
My guess is your firm still uses TOPS to execute minis, and hence your
bias???
I have a question at the end. If you would please provide your input there.
***** Joe, we do offer trading via an Internet Platform that uses TOPS. We
also offer the Interactive Broker's Trader Workstation. And, we are in the
process of offering PATS System. I try very hard not to speak from a voice
of self interest. I try very hard not to be biased about these issues.
Rather, I try to offer my clients a choice of interface or Trading Platform
and let them decide for themselves what they want and need. If I can deliver
it, great. If not, I will offer them my input into where they might find
what they are looking for. TOPS, FIX, ETC, a/c/e, Globex2 will change.
Honesty does not. While there is no thing such as unbiased, I try to be as
balanced as I can in representing the alternatives. Fair enough?
=====================================================
Not mixing at all that I see. The CME FIX API has been designed to allow
firms and Independent Software Vendors to integrate their order entry and
routing systems with the CME. FIX API functionality is designed to route
orders from external order routing systems through the CME's central Order
Managers (OMs) to GLOBEX2, CUBS2 and/or TOPS. TOPS is NOT an electronic
gateway. That is a small part of it AND one the CME is encouraging users to
not use for e-trading. TOPS is NOT an e trading platform, and is tangentally
involved in the sense your telephone used to be for trading.
======================================================================
***** OK, the guy who built the gateway between TOPS and Globex always
refers to this interface as a gateway and so does every help desk I have
talked to. TOPS routes, through this interface (gateway to him), into
Globex2 for emini trading. TOPS is a routing system. It is part of the
equation. You are right about the semantics. Apples and Oranges was not a
good example, except in the context of being part of a meal. The Globex2
host is nothing without routing systems to enter orders into it, regardless
if that is GL Win, or TOPS.
===================================================
Okay, I could have said "sent" instead of called, as a phone is not
necessary. Other then that its exactly accurate.
==================================================
****** OK, that helps. :-)
==========================================================
The CME FIX API provides access to both GLOBEX2 and exchange floor
operations through TOPS and CUBS2. The CME FIX API will replace the Order
Routing API (ORAPI) and has been designed to overcome the current
limitations of the ORAPI interface as well as REPLACE the TOPS process for
all order flow directed to the GLOBEX2 electronic trading system and the
CUBS2 electronic broker desk management system.
=========================================================
***** This is where you are getting into vaporware. FIX API is not being
used to connect to CUBS2 or TOPS at present, as I previously wrote. There is
no volume through either route. In some ways, the FIX API is still a beta or
uncomplete product because of the fact it is not being used for these two
functions it was intended for. However, the FIX API does not offer the same
functionality that TOPS does for order management. When an EC fails at the
CBOT, where are orders routed? To a TOPS printer. When a CUBS2 unit fails
at the CME, where are the orders routed. To a TOPS printer. Both of these
assume the orders where sent through TOPS. Even if the FIX API offered
connections to the CUBS2 devices, there is no plan that I know of for how to
handle orders when the device fails. This is a very messy and risky process,
even with TOPS. I would not want to be a floor broker in such cases. I
wholeheartily agree that TOPS is being used for purposes it was not intended.
But, as I have said before and will repeat, I believe TOPS will be around
for as long as Open Outcry is around. Not my original thought, but I agree
with it. The CME seems to agree too, as they have decided to turn TOPS into
a cash cow. They also want to influence people to move off of TOPS into the
FIX by increasing the cost for TOPS. And they especially want to get the
CBOT volume off of their part of the system, or make a lot of money servicing
it.
===========================================================
This discussion was SOLELY about stock index mini trading. And for mini
trading TOPS is not the best choice.
===========================================================
***** As I stated, I believe that it really depends on the style of trading
and value you place on various risks. If I wanted a system that I could talk
to one of 100 people to manipulate my order if the Internet Trading platform
was down, then I would not choose one of the FIX API systems. In a couple of
years, you may have no choice, or there may be greater functionality. The
Firmsoft product from the CME is a good start, but it is limited. It is not
available over the Net yet, only by some dedicated connection to the CME.
And Firmsoft does not allow the user's access to be limited to specific
offices within a clearing firm. Thus, I can't use the system directly. I
would be able to see all of ED&F Man's orders if I could. I don't know the
numbers, but I would not be surprised to find more volume being generated
from TOPS than from FIX for Globex2 trading. Maybe I am wrong, but I believe
more retail volume is going over TOPS than FIX into GLOBEX2. I have a call
in to check that.
***** Another factor in all of this is that there are not enough firms
offering FIX API access to Globex2. One firm I know of, which does
significant volume, has had some system performance problems and
capitalization problems as well. Significant moves in the stock market, at a
firm with a concentration of stock index traders, could cause a marginally
capitaized firm have capital problems if their clients where too successful.
So there are all sorts of risks to consider when choosing a broker and an
interface.
***** As I said above, we will be offering PATS System. It is the best
looking and functioning system I have seen and has good support and
capitalization for the ISV. Some of the FCMs offering their own systems may
not have the same resources available to them to be able to grow their
systems properly. This was an issue I considered when choosing this system.
Clearly, the exchanges want out of the order routing business, thus the push
to move from TOPS. FCMs may well come to the same conclusion and look to the
efficiencies of letting ISVs develop systems to use.
=======================================
Maybe I am confused. I understood there were many OM's that "held" the STOP
and MIT orders and then sent them for execution as elected.
Your saying this is not true?
=======================================
****** It depends. TOPS orders go to a CME Order Manager Server, which is
separate from Globex2. It hold stops, which become "or better" limit orders
as set by the FCM. Market orders also are routed to the OM Server from TOPS
and become or better orders basis the last price when the order is received.
FIX API stops, to my knowledge, are all managed outside of the exchange
system by the FCMs or ISVs. I don't know the specifics of how these are
treated and that probably varies from firm to firm. PATS Systems, which
accesses Globex2 through the FIX API, holds the stops on the user's computer.
When the incoming price feed shows a trade at that price, the order is then
sent as an unlimited limit order to Globex2. This was not a bad design when
it was being used by a bunch of institutional traders with hard wire
connections. I think there is a better design for traders connected from the
Internet. Though, there are some advantages to having them on your own
machine for quality assurance reasons. You have all the controls and
measurements for your system, so you can monitor and control the use of these
stops at a greater level.
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.
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