Block Trading Begins on Treasury futures & options and Fed Funds

Quote from steve46:

What this means Austin is that institutions now have a significant advantage over you especially if you trade that market on a short term basis.

It means they can hide their trade from public participants and position themselves "in front" of the public (just my opinion).

Finally it means that the public record of what trades is worthless.

Frankly at this point I am glad I am not competing in this market. In my opinion unless a retail trader is buying debt as a long term investment, they are going to be cannon fodder.
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Agree 100%

Ever since the markets started going electronic it seems they are now more rigged/manipulated against the small player than ever before. Especially with fixed income imho. I don't want to even imagine how much worse it is going to get in the future.

YT
 
<i>"Frankly at this point I am glad I am not competing in this market. In my opinion unless a retail trader is buying debt as a long term investment, they are going to be cannon fodder."</i>

Steve, I agree with you 100% as per the traders who use volume and/or depth of market studies for trade decisions. Those players will have to adapt or perish, unfortunately. It always sucks when we have something with an edge negated by changing market dynamics. For sure.

In my case, I trade via price action itself. I would assume the same size trades which were once visible to those who viewed are now transparent. Same price patterns and behavior on my charts, essentially nothing has changed.

For me, it's a tree falling alone in the forest. I never heard the crash before, still don't hear it now, but I do pick up the nuts that spilled from that process.

Better than being the squirrel who was digging beneath the proverbial tree's shadow before it fell :eek:
 
Quote from austinp:

...
In my case, I trade via price action itself. I would assume the same size trades which were once visible to those who viewed are now transparent. Same price patterns and behavior on my charts, essentially nothing has changed.
...
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Think again my friend. The game has changed!

excerpts from CME links provided by OP

Block trade prices are reported independently of transaction prices in the regular market and are not
included as part of the daily trading range. Block trade prices do not elect conditional orders (e.g. stop
orders) or otherwise affect orders in the regular market.

Block trades must be reported to the Globex Control Center (“GCC”) by the seller within five minutes of
the transaction. The seller reports the trade by calling the Globex Control Center (“GCC”) at
312.456.2391. When the GCC is closed – for example, during the weekend – the block trade must be
reported no later than five minutes prior to the opening of the next electronic trading session.

The date, execution time, contract details, price and quantity of block trades are reported upon receipt of
the block information by GCC. Block trade information is reported on the MerQuote system and may be
accessed by entering the code “BLK”. The information will also be displayed on cmegroup.com at the
following link: http://www.cmegroup.com/tools-information/blocktrades.html
Block trade information is also displayed on the trading floor.
Block trade prices are published separately from transactions in the regular market.
Block trade volume by contract is detailed in the daily volume reports published by the Exchange.

The CBOT prohibition on pre-execution communications and prearranged trading detailed in
Rule 539 specifically states that these restrictions do not apply to block trades.

Beginning March 3, 2008 CME Group will reduce the minimum tick size for three of its most actively traded U.S.
Treasury contracts. Pending CFTC approval, the following modifications will be made:
• 30-Year U.S. Treasury Bond futures from 1/32nd to 1/2 of 1/32nd (from $31.25 to $15.625)
• 5-Year U.S. Treasury Note futures from 1/2 of 1/32nd to 1/4 of 1/32nd (from $15.625 to $7.8125)
• 5-Year U.S. Treasury Note options from 1/64th to 1/2 of 1/64th from ($15.625 to $7.8125)
Additionally, CBOT Directors have approved the use of block transactions for CBOT Interest Rate products. The
minimum order size requirements during regular trading hours (RTH) will vary by product and order type
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Osorico
 
Quote from steve46:

What this means Austin is that institutions now have a significant advantage over you especially if you trade that market on a short term basis.

It means they can hide their trade from public participants and position themselves "in front" of the public (just my opinion).

Finally it means that the public record of what trades is worthless.

Frankly at this point I am glad I am not competing in this market. In my opinion unless a retail trader is buying debt as a long term investment, they are going to be cannon fodder.
More...

I am 'open mouth stunned' at how inefficient this now makes retail trading for the Bonds... Fading the book, TS, might now become a smarter play...

Steve, et al... has there ever been a situation where enough complaints to an exchange have reversed a decision like this.

Won't this create a steady decline in the amount of and quality of retail speculative liquidity as thousands of traders trade other markets, vote with their feet by leaving, for fairer trading processes in other markets...

i guess i mistakenly thought electronic trading was going to slowly bring about more and more transparency...


<img src="http://www.enflow.com/p.gif">
 
I have traded fixed income at the cbot since 1995. And this is a new one. Is this block trading ----going on over the phones? Where do we find this market? You would think I could pull up the deck for the blocks being bid and offered.

In the pits, the lot sizes actually had different areas. In other words, a market on a 1000 lot was sometimes different than the market on say a ten lot. That is the way a pit works....different prices and internal markets going on at the same time. One of the advantages of electronic trading is that is did away with all that and created a more level playing field.......UNTIL NOW
 
By the way, this is why we do not see the monster size in the deck for the Bund and bobl----block trading.

I need to call around on this one.
 
The game has changed for the small guy - well maybe not.

It depends what your input is for making buy and sell decesions.

No matter what they do, it will be reflected on price, but then it depends what game you are chasing, rabbits in the bushes or some bigger game ? :D
 
A quick question.

How will this affect options traded in the pit? I have gained valuable information from looking at who did what and when they did it in the options pit. I hate to think I won't be able to do that anymore with this block trade crap.

YT
 
..furthermore the legendary transparency about the CBOT price discovery auctions, about which CBOT developed 25 years the Market Profile and LDB, has been hit by CME Group that approved this Block Trading practice....
 
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