CME Counterparty Information

bolter · May 2, 2006

Was surprised to come across this quote today:

"...... will be even more important at the CME beginning on May 1st when they do away with counterparty information. It will be much harder for large locals to manipulate the marketplace because they wonât know who is feeding them the orders anymore."

Are there any CME members or traders who elaborate on what this change is all about? I'm surprised it hasn't been ET'ed to death yet.

bolter · May 2, 2006

bump ....

dandxg · May 2, 2006

So that means X Trader will change as they currently show that info, hmm? May help pikers like me.

rufus_4000 · May 2, 2006

Quote from bolter:

Was surprised to come across this quote today:

"...... will be even more important at the CME beginning on May 1st when they do away with counterparty information. It will be much harder for large locals to manipulate the marketplace because they wonât know who is feeding them the orders anymore."

Are there any CME members or traders who elaborate on what this change is all about? I'm surprised it hasn't been ET'ed to death yet.

I am a CME member, and I have not heard of this. The counterparty will still be available via clearing (at least, otherwise clearing can not be carried out), but whether the counterparty field will still be populated on Globex is a different question, CME already removed the counter-trader field on Feb 5th, all it remains is the counter-firm field.

http://www.cme.com/trading/get/adv/17208.html

Pabst · May 2, 2006

If I were a clearing member I'd be a little freaked out. If you think about it Rufus, the idea of a clearing member counter party has become obsolete with Globex. No out-trades. What I can see happening in the future is this: the Exchanges become the clearing firms! Think about it. Why not just open an account with the CME directly? Eurex is only a step away from it.

bolter · May 2, 2006

Thanks for your input Rufus.

rufus_4000 · May 2, 2006

Quote from Pabst:

If I were a clearing member I'd be a little freaked out. If you think about it Rufus, the idea of a clearing member counter party has become obsolete with Globex. No out-trades. What I can see happening in the future is this: the Exchanges become the clearing firms! Think about it. Why not just open an account with the CME directly? Eurex is only a step away from it.

While I am not sure CME wants the hassle of dealing with individual customers, CME is definitely moving to try to add more clearing members. Their thinking is simple, a firm that self-clears is more likely to throw more volume at CME given the lower clost of trading, and more liquidity will encourage more non-member customers looking for those liquidity. See here:

http://www.cme.com/about/press/cn/06-08Clearingstockreduction17082.html

This is clearlying to encourage the trading firms to go self-clear, or at least go to a facility management setup.

mcurto · May 2, 2006

I'm pretty sure Brumfield and buddies at GHCO have developed a personal application that pulls counterparty info from trades and they are in the process of getting the CBOT to allow them to do this legally. Don't quote me on this, but have heard it from a few sources.

rosy · May 2, 2006

Quote from Pabst:

What I can see happening in the future is this: the Exchanges become the clearing firms!

thats what exchanges are. they clear the brokerage/ member clearing firms. thats where the exchange makes money.

rufus_4000 · May 3, 2006

Quote from mcurto:

I'm pretty sure Brumfield and buddies at GHCO have developed a personal application that pulls counterparty info from trades and they are in the process of getting the CBOT to allow them to do this legally. Don't quote me on this, but have heard it from a few sources.

Well, the counter clearing firm is a tag on the eCBOT execution messages. Of course, if a clearing firm want to match up an execution with the counter party information pulled from CCL (Common-Clearing Link between CME and CBOT), they could do that fairly easily as well. There will be a slight delay (as much as 15 mins under CCL) if the counter firm info is pulled from CCL. When I was running a desk back in the ibank, I had the clearing side periodically extract the CCL feed for my accounts, and then a developer on my desk wrote a simple app that mapped the post-trade CCL message into the trade execution message. Pretty simple stuff, but it also allowed the entire desk to see any "big" flows fairly quickly (and who is moving the market), very similar to standing on the floor.