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Leasing Exchange Seat
- Thread starter nicbizz
- Start date
Did a little more research, and found the latest fee schedule (1 Aug 2010) from the CME here:
http://www.cmegroup.com/company/files/CME_Fee_Schedule.pdf
Take a look at Note 9 on page 2. Do these Globex Fees discounts apply if I lease a seat as well? I remember reading elsewhere on ET that there's a cap, but can't find any note of it on the Fee Schedule.
If that's true, I can't believe how much I'm paying now (through IB) vs leasing a seat and moving to another broker.
Take Advantage Futures for example.
Assuming 5000 sides per month
= $2,080 in comms.
+ $1300 in exchange fees
+ $1000 lease
= $4380 (or $0.876 per side)
IB = $9,000 (or $1.80 per side)
Do I have my math right? The difference seems too huge to be true!
http://www.cmegroup.com/company/files/CME_Fee_Schedule.pdf
Take a look at Note 9 on page 2. Do these Globex Fees discounts apply if I lease a seat as well? I remember reading elsewhere on ET that there's a cap, but can't find any note of it on the Fee Schedule.
If that's true, I can't believe how much I'm paying now (through IB) vs leasing a seat and moving to another broker.
Take Advantage Futures for example.
Assuming 5000 sides per month
= $2,080 in comms.
+ $1300 in exchange fees
+ $1000 lease
= $4380 (or $0.876 per side)
IB = $9,000 (or $1.80 per side)
Do I have my math right? The difference seems too huge to be true!
Thanks for your very detailed post Ghost of Cutten. It helped clear up which seat I should be considering.
Yup, got in touch with a couple others futures broker. The only hesitation I have is that some of them offer $500 intraday margins - thats just a 10-pt move in the ES. I guess I'm just concerned these guys might go under should there be another crash type event that put a significant number of their customers in debit.
Yup, got in touch with a couple others futures broker. The only hesitation I have is that some of them offer $500 intraday margins - thats just a 10-pt move in the ES. I guess I'm just concerned these guys might go under should there be another crash type event that put a significant number of their customers in debit.
Quote from nicbizz:
Thanks for your very detailed post Ghost of Cutten. It helped clear up which seat I should be considering.
Yup, got in touch with a couple others futures broker. The only hesitation I have is that some of them offer $500 intraday margins - thats just a 10-pt move in the ES. I guess I'm just concerned these guys might go under should there be another crash type event that put a significant number of their customers in debit.
Well low margins allow you to mitigate that risk by keeping a small account. Having 20k in a broker account with $500 margins and 80k cash in your bank is lower risk than having 100k in your broker account because their margins are $2500. Another benefit of a smaller balance is if you ever go on tilt you will get auto liquidated after you drop the 20k. You have to at least wait one day for a bank wire to clear, which should give you time to clear your head. Whereas if you are fully funded, you could keep averaging down and lose the full 100k in a few minutes of madness. Don't underestimate the usefulness of this kind of artificial stop-loss.
Most brokers nowadays have software to liquidate customers if they run out of cash. Also, with the flash crash happening a few months ago, any current broker is already "battle tested" to some extent. Let's face it, in a market crash you are far more likely to blow up by being caught the wrong way and averaging down into a loser due to losing your discipline, than you are to lose money by your broker blowing up. The latter is still a risk, but if you only keep 5-20% of funds at your futures broker, you are somewhat hedged against that particular grey swan.
As for leasing vs owning, IIRC you have to pay 25 cents more per side as a lessor, but check with the exchange, they are pretty helpful.
Some results from my research among the various futures brokers. I thought I'd publish them here if anyone's interested. The numbers here are commission (excl exchange fees) and an X-Trader subscription (except for IB and OpenECry, which has their own platform).
At 2,500 contracts per month ($ / contract):
Global Futures - 0.71
Interactive Brokers - 0.73
Variance Pro - 0.78
Velocity - 0.85
Advantage - 0.82
Open ECry - 1.05
At 5,000 contracts per month ($ / contract):
Advantage - 0.56
Global Futures - 0.58
Variance Pro - 0.58
Velocity - 0.69
Interactive Brokers - 0.69
Open ECry - 0.90
At 10,000 contracts per month ($ / contract):
Advantage - 0.28
Variance Pro - 0.46
Global Futures - 0.51
Velocity - 0.57
Interactive Brokers - 0.67
Open ECry - 0.82
Instituitional Accounts (flat rate but require $250,000 min)
Variance - 0.35
Global Futures - 0.24
The Instituitional accounts offer the cheapest commissions, but keep in mind that you're tying up $250,000 in cash that would otherwise be earning you some interest with a regular broker.
At 2,500 contracts per month ($ / contract):
Global Futures - 0.71
Interactive Brokers - 0.73
Variance Pro - 0.78
Velocity - 0.85
Advantage - 0.82
Open ECry - 1.05
At 5,000 contracts per month ($ / contract):
Advantage - 0.56
Global Futures - 0.58
Variance Pro - 0.58
Velocity - 0.69
Interactive Brokers - 0.69
Open ECry - 0.90
At 10,000 contracts per month ($ / contract):
Advantage - 0.28
Variance Pro - 0.46
Global Futures - 0.51
Velocity - 0.57
Interactive Brokers - 0.67
Open ECry - 0.82
Instituitional Accounts (flat rate but require $250,000 min)
Variance - 0.35
Global Futures - 0.24
The Instituitional accounts offer the cheapest commissions, but keep in mind that you're tying up $250,000 in cash that would otherwise be earning you some interest with a regular broker.