ER2 traders - what to do about CME/ICE?

S

sandygray66

As we all know, ICE has won the contract to be the exchange for the Russell 2000 e-mini. As I understand it, the ICE Russell will start trading this month and the CME will continue to host the ER2 until September 08. Meanwhile, the CME will bring out its own small cap e-mini based on the S&P Small Cap 600 (to be based on tick increments of 0.1 pts worth $10, like the current ER2) sometime soon (presumably to compete with ICE once the CME loses the ER2 completely).

So over the next 12 months, it would appear that volume could be split between the current CME ER2, the new ICE Russell and the new CME S&P Small Cap 600.

What do other ER2 traders plan to do about this? I trade the ER2 exclusively and am concerned about the volume being split amongst these competing products. I'd prefer to stay with a CME product (will stick with ER2 for now), but I wonder how much volume will move to the new Russell product coming out on ICE. Will volume move to the ICE Russell or the CME S&P Small Cap 600?

I have no idea how CME could have lost the Russell contract. I guess they were more focused on not losing the CBOT to ICE. :mad:
 
This is why I don't concentrate on single contract. I could spend a few years and become ultra-profitable on Russell, then the contract changes. Better to develop a general approach.
 
Quote from cmaxb:

This is why I don't concentrate on single contract. I could spend a few years and become ultra-profitable on Russell, then the contract changes. Better to develop a general approach.
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I do agree with this...it is best to have a system which works on multiple products.
 
Quote from thesecrettrader:

I do agree with this...it is best to have a system which works on multiple products.
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Yes but it is also great to trade a product that has great bang for buck.. and the ER2 is in a category all it's own in that department
 
Quote from sandygray66:

As we all know, ICE has won the contract to be the exchange for the Russell 2000 e-mini. As I understand it, the ICE Russell will start trading this month and the CME will continue to host the ER2 until September 08. Meanwhile, the CME will bring out its own small cap e-mini based on the S&P Small Cap 600 (to be based on tick increments of 0.1 pts worth $10, like the current ER2) sometime soon (presumably to compete with ICE once the CME loses the ER2 completely).

So over the next 12 months, it would appear that volume could be split between the current CME ER2, the new ICE Russell and the new CME S&P Small Cap 600.

What do other ER2 traders plan to do about this? I trade the ER2 exclusively and am concerned about the volume being split amongst these competing products. I'd prefer to stay with a CME product (will stick with ER2 for now), but I wonder how much volume will move to the new Russell product coming out on ICE. Will volume move to the ICE Russell or the CME S&P Small Cap 600?

I have no idea how CME could have lost the Russell contract. I guess they were more focused on not losing the CBOT to ICE. :mad:
More...

In terms of bang for the buck the S&P Small cap 600 contract (SMC) is not comparable to ER2. The reason is the S&P index has half the value of the Russell index. This means the daily range will be half.

In terms of bang for the buck SMC is closer to ES than ER2.

Any traders who trade ER2 because of the large number of intraday ticks (at $10 a tick) will not be interested in SMC.

Im more concerned about the $50 dollar ICE ER2 contract, this could take volume from the smaller one eventually. The large contract will save traders a fortune in commisions but its not as scalable and therefore harder to apply good money mangement for smaller accounts.
 
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