Cost Structure for CME Futures Traders

millydog · Sep 5, 2006

Quote from FuturesTrader71:

Not true. ER2 can be traded under a GEM at member rates.

Thst is true, I Talked to the CME today.

FuturesTrader71 · Sep 6, 2006

For future reference, you can refer to this document to figure out the kind of membership needed to trade a specific product.

http://www.cme.com/files/ProductListingByDivision.pdf

r-in · Sep 6, 2006

Thanks for posting the link Futures. I tried to put it in with my last post, but must have screwed up as it didn't post. I trade mostly er2 also, so I'm going to have to look into GEm also. I had looked at IOM only in past.
Thanks once again Futures!

Hombre · Sep 6, 2006

Quote from scalper21:

You should also look at buying a GEM seat. I own my GEM seat. At the moment the offer is 27,500. Members pay .095 clearing fee. Leasees pay .21. Do the math and see if owning would be helpful.

What can you trade with your Gem seat ?
thanks,
hombre

millydog · Sep 6, 2006

Quote from Hombre:

What can you trade with your Gem seat ?
thanks,
hombre

Well

in terms of liquidity just realy the emini russell 2000. Your other options include markets such as the the Mexican Peso, or Brazilian Real.

Bernard111 · Sep 8, 2006

Quote from scalper21:

http://www.cbot.com/cbot/pub/cont_detail/0,3206,1042+40879,00.html#1

It looks like the clearing fees to trade interest rates at CBOT is .20. when leasing a seat. I tried to find what a seat is leasing for and could not find the info on CBOT website.

Ok, so leasing one seat you should pay 20 cents vs. 45 cents per side as exchange fees and they are going to increase again to 50 cents after October 1.

Here is the page regarding the Leases:
http://www.cbot.com/cbot/pub/page/0,3181,936,00.html

According to the Summary of Membership Privileges at http://www.cbot.com/cbot/pub/cont_detail/0,3206,931+32359,00.html
you need a B-3 (GIM) seat at least to trade Tsy futures.
More costly seats are the B-2 (Associate) and B-1 (Full).

Also I'm investigating the initial application fee and lease agreement costs for a GIM.

Then we should get all the factors to calculate the breakeven in terms of volume to lease a seat on Treasuries, so trading as 'Delegate' according to the table at http://www.cbot.com/cbot/pub/page/0,3181,1042,00.html .

millydog · Sep 8, 2006

Anyone have any comments on what the discontionuation, or continuation of the ECM program will do to seat prices.

From what I was told you currently don't need to either own or lease a seat to parcipitate in the program, but if they end it you will then need to.

FuturesTrader71 · Sep 9, 2006

Quote from millydog:

Anyone have any comments on what the discontionuation, or continuation of the ECM program will do to seat prices.

From what I was told you currently don't need to either own or lease a seat to parcipitate in the program, but if they end it you will then need to.

Seat prices will likely go up. There will be demand from those guys who can't handle trading at $4 per turn. It becomes more feasible to just own the seat. Also, with an ECM, you cannot have been a leasing or other member of the exchange. Therefore, if the ECM program goes away and one jumps on a lease or membership and the ECM program comes back, then you would not qualify for doing the ECM membership again. A very bizarre situation. The will need to make an announcement soon on what the status of the ECM will be.

millydog · Sep 9, 2006

Quote from FuturesTrader71:

Seat prices will likely go up. There will be demand from those guys who can't handle trading at $4 per turn. It becomes more feasible to just own the seat. Also, with an ECM, you cannot have been a leasing or other member of the exchange. Therefore, if the ECM program goes away and one jumps on a lease or membership and the ECM program comes back, then you would not qualify for doing the ECM membership again. A very bizarre situation. The will need to make an announcement soon on what the status of the ECM will be.

I'd imagine that if they choose to extend the program then seat prices may drop in the near term. I am thinking about purchasing the GEM seat but I want to wait for the anouncement first. I'd hate to buy it and then see the price drop in half after.

scalper21 · Sep 9, 2006

Quote from millydog:

I'd imagine that if they choose to extend the program then seat prices may drop in the near term. I am thinking about purchasing the GEM seat but I want to wait for the anouncement first. I'd hate to buy it and then see the price drop in half after.

GEM seats will not drop. The Russell contract is exploding.

Calculate the money you would save by owning a GEM. Even if the seat loses value(highly unlikely) you would save in commissions and not having to lease a seat.

$250 lease seat save $2500 a year

.21 clearing fee for leases - .095 clearing fee for owners
100 lots a day which is 2000 a month and 24000 a year save $2415

200 lots a day which is 4000 a month and 42000 a year save $4830

600 lots a day which is 12000 a month and 144000 a year save $16500

So lets say you buy a GEM for $25000 and to your disappointment the seat loses value and is selling for $20000 this time next year. If you average 100 lots a day you would have saved $4915 . If you average 200 lots a day you would save $7330. I think the purchase of a GEM seat is a wise decision. If you average 600 lots a day you would save $19000.

I purchased my GEM seat around March and it was a great move.