End of forex brokers CME & Reuters join forces
- Thread starter RedDuke
- Start date
When speaking about "normal" markets, yes, retail would mean a broker who provides straight through processing (STP). But since Forex has many maker-makers who deal directly with retail, when they say not targeted at retail, they mean no direct retail access. Just like any exchange. And just like the other competing platforms. But like the other platforms and exchanges, retail players can have direct access to them. It just takes some serious capital in order to gain access to them.
One of the first brokerages promising to provide access to FX marketspace is Interactive Brokers (see May or June issue of Futures Magazine). Others will follow suit shortly I presume. There's nothing baring a well capitalized retail firm from providing their clients STP with FX Marketspace. The only thing which might bar certain retail players from participating is if they(CME/Reuters) set a minimum deal size of $1mm.
I haven't seen any text on minimum deal size or increments.
Not sure what you're asking.
CME has confirmed that there will be retail access to it via a brokerage. It's just Globex with a twist. Email them, call them. But be specific with your questions. Your ability to trade depends on the minimum deal size. Of it's a standard lot (100k), you're in business. If it's larger, well... got milk?
Simple. Since the platform/exchange will be STP(straight through processing) with a per transaction fee, and centralized clearing, there is nothing to stop a retail brokerage from participating. Therefore, there's nothing to stop a retail client of said firm from participating. It's just like Globex in that you can't call up the CME and say, "Hey, I'd like to bypass my broker and trade on Globex directly, thanks." There are some things you have to do first. Buy or lease a seat. Get a clearing firm. Lease a fractional T1, Get a front end like TT. etc, etc. But unless you're doing serious volume, the monthy expenses of direct access to Globex will bankrupt you in short order. I.e. just not cost effective. So you go through a broker instead who has established all that which provides you access at a reduced cost, aka a commission and maybe a platform fee if you want a more professional setup.
Hey, I could be dead wrong about all this. Not all the details have come out. But enough clues have come out to speculate reasonably. CME/Reuters could literally, to their detriment, bar certain types of firms from participating via a number of ways. But given CME's track record of late, especially with Globex, there is no way that they would bar any type of firm with reasonable assets from participation. Their goal is domination. There are other competing setups out there already with a few more being conjured up as of late. CME knows that their edge is not just centrailzed clearing, but open access. And their FX futures offerings will also list on the platform in an effort to boost interest (read:volume). Their FX futures are already available on the retail level. It's all there, but as with anything, time will tell.
I still think you all are licking your chops over something that's yet to prove itself and have forgotten the dark history of the CME and the Globex. Liquidity will still be limited to the players on this system and you know the brokers are going to charge deep commissions for little traders!
Another thing that constantly is talked about is that someone always refers to retail forex dealers as a bucket shops, but these are just far and few between these days. If you want a true definition of what bucket shop is, see below:
Bucket shop - An illegal brokerage firm that accepts customer orders but does not attain immediate executions. A bucket shop broker promises the customer a certain price, but waits until a price discrepancy is present and the trade is advantageous to the firm and then keeps the difference as profit. Alternatively, the broker may never fill the customer's order but keep the money. (Bloomberg)
Regulation in the U.S. has done away with these types of institutions. Forex dealers tell you up front that you are paying the spread, which sometimes you don't even pay. You know you are going to pay tom next, which can work out in your favor. I just think more retails dealers are honest than not because they wouldn't be in business if they weren't.
Another thing that constantly is talked about is that someone always refers to retail forex dealers as a bucket shops, but these are just far and few between these days. If you want a true definition of what bucket shop is, see below:
Bucket shop - An illegal brokerage firm that accepts customer orders but does not attain immediate executions. A bucket shop broker promises the customer a certain price, but waits until a price discrepancy is present and the trade is advantageous to the firm and then keeps the difference as profit. Alternatively, the broker may never fill the customer's order but keep the money. (Bloomberg)
Regulation in the U.S. has done away with these types of institutions. Forex dealers tell you up front that you are paying the spread, which sometimes you don't even pay. You know you are going to pay tom next, which can work out in your favor. I just think more retails dealers are honest than not because they wouldn't be in business if they weren't.
Surf what is up!!!!
I hate to say it folks, but I told you so. ddunbar, good wrapup, and I agree with you, with one exception. The liquidity providers that one is able to execute against on the CurreneX depend on the Prime Broker you use, for example we execute on the CurreneX and it is against far more than the Big 10, and the list does include Hedge funds, and other financial institutions.
We are really looking forward to see how the CME works all of this out
I hate to say it folks, but I told you so. ddunbar, good wrapup, and I agree with you, with one exception. The liquidity providers that one is able to execute against on the CurreneX depend on the Prime Broker you use, for example we execute on the CurreneX and it is against far more than the Big 10, and the list does include Hedge funds, and other financial institutions.
We are really looking forward to see how the CME works all of this out
Wow, did I forget to answer this? We use PFG, and they have treated us very well. Now on the currenex we are in a PFG's liquidity hub and so far liqidity has not been a problem. And PFG is not really a prme broker they are a white label provider for CurreneX. Sometimes we improperly interchange the two terms
The Ever Informative VIPER
The Ever Informative VIPER
Quote from TradeViper:
Surf what is up!!!!
I hate to say it folks, but I told you so. ddunbar, good wrapup, and I agree with you, with one exception. The liquidity providers that one is able to execute against on the CurreneX depend on the Prime Broker you use, for example we execute on the CurreneX and it is against far more than the Big 10, and the list does include Hedge funds, and other financial institutions.
We are really looking forward to see how the CME works all of this out
you rock, viper!
keep the good info flowing, bros.
surf
Hey Viper,
I have spoken to PFG various times, but what they wanted to charge me was around $50 per million per side. This is double what some Currenex white label providers have charged me.
Do you guys have a different commission arrangement? Do you use them to "scalp" and generate a lot of transactions or not?
Thanks.
I have spoken to PFG various times, but what they wanted to charge me was around $50 per million per side. This is double what some Currenex white label providers have charged me.
Do you guys have a different commission arrangement? Do you use them to "scalp" and generate a lot of transactions or not?
Thanks.