CME/CBOT Seat Leases -Why have they just dropped in value?

Quote from THE-BEAKER:

totally wrong.

most hft firms are market makers that get paid for providing ' liquidity '.

so they get fee rebates and cheap round trips anyway.


why do u think the price of the seats is falling?

because hft are queing up to buy them? i dont think so.

think again and give me another reason.
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You realize we are talking futures at the CME, and not equities, right? Do you actually know anything about the substance of the lead market-maker programs at the CME?

As far as lining up to buy memberships/seats, every prop firm (in the Chicago, futures sense) has one. But you only need *one*. DE Shaw and RenTech only need one (slight exaggeration.... They have more than one, but not many more.) The demand for seats were driven historically by locals, thousands of little guys with a few hundred thousand in the bank.
 
Quote from LincolnArmy:

I was just looking at the cbot AM leases and noticed that while the price is roughly $1300/month, there are several seat offered below $1000, one even at $700.
Does anyone know why the seat prices and lease prices have just taken a beating?
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Sponsored access?
 
I would say a few factors : low volume/slow market since MF collapse, more pit traders leaving and the availability of "free" electronic memberships for firms. Belonging to the IIP program like I do just cost a one-time 2K fee and then you only pay around 30 cents more per lot than true members.
 
Quote from heech:

You realize we are talking futures at the CME, and not equities, right? Do you actually know anything about the substance of the lead market-maker programs at the CME?

As far as lining up to buy memberships/seats, every prop firm (in the Chicago, futures sense) has one. But you only need *one*. DE Shaw and RenTech only need one (slight exaggeration.... They have more than one, but not many more.) The demand for seats were driven historically by locals, thousands of little guys with a few hundred thousand in the bank.
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You realise that you also get a rebate for providing liquidity on futures markets right ?

But there's a limit on it, per month. On equities there is no limit on the rebate. That's why the rebate on the equities is known, and the rebate on the futures market is rather unknown.

glad I could help.
 
Quote from traderslair:

You realise that you also get a rebate for providing liquidity on futures markets right ?

But there's a limit on it, per month. On equities there is no limit on the rebate. That's why the rebate on the equities is known, and the rebate on the futures market is rather unknown.

glad I could help.
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Thanks for "helping".

There are only a few market-makers in the few markets in which there's even a LMM program. And almost all of these market-makers are, well, traditional market making firms. NONE of these are "HFTs" by any stretch of the imagination. They live off of ask/bid, in the old fashioned sense.

And the CME does make accommodations to attract market-makers, but cash rebates simply don't apply. (I'm actually not aware of ANY CME market in which you get paid, by the CME, for making markets.) What incentives do you get? You get priority fills from the fill engine (depending on instrument). You get rebates from some Globex fees. But you're STILL paying for clearing fees, so you are still net negative on every single commission.
 
Quote from heech:

Thanks for "helping".

There are only a few market-makers in the few markets in which there's even a LMM program. And almost all of these market-makers are, well, traditional market making firms. NONE of these are "HFTs" by any stretch of the imagination. They live off of ask/bid, in the old fashioned sense.

And the CME does make accommodations to attract market-makers, but cash rebates simply don't apply. (I'm actually not aware of ANY CME market in which you get paid, by the CME, for making markets.) What incentives do you get? You get priority fills from the fill engine (depending on instrument). You get rebates from some Globex fees. But you're STILL paying for clearing fees, so you are still net negative on every single commission.
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Any questions???
 
Oh, and to bring things back on topic.... These market makers have nothing to do with the seat/license issue we have been talking about.

There are probably 10-20 MM firms out there, total. There are thousands (tens of thousands?) of CME members.
 
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