Micro CL contract - support the introduction by CME - petition
- Thread starter steve2222
- Start date
Just edit your post, erase everything in it, and replace it with this...
[*QUOTE="Overnight, post: 4962086, member: 494466"]What "danger?"
The micro currencies and micro gold have been around for what, 10 years? Any danger seen in those yet? The micro equities have been around for 6 months. What "danger" has cropped up with them?
So what danger will crop up with a micro-CL?[/QUOTE*]
Just remove the asterisks first. The add your comment below it.
[*QUOTE="Overnight, post: 4962086, member: 494466"]What "danger?"
The micro currencies and micro gold have been around for what, 10 years? Any danger seen in those yet? The micro equities have been around for 6 months. What "danger" has cropped up with them?
So what danger will crop up with a micro-CL?[/QUOTE*]
Just remove the asterisks first. The add your comment below it.
what foolish idea.
QM volume is about 50 times smaller than CL volume.
true micro CL volume will be 500 times smaller ?!?!?!
Exchange wouldn't be foolish to introduce such product.
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Yeah, didn't explain my self well enough - I am talking about the tick size as in the NQ has a tick size of 0.25 with a $ value of $5 and the YM has a tick size of 1 with a $ value of $5 and the CL has a tick size of 0.01 with a $value of $10, well the QM has a tick size of 0.025 with a $ value of $12.50, but this new micro needs to have a tick size of 0.01 (same as CL) with a $ value of $1.00.
Don't agree at all. Your thinking is the same as what people warned about with the introduction of the micro equity index contracts and look at how that has turned out.
The QM is a disaster as it does not follow the same tick size of the CL (0.025 vs 0.01).
CME and brokers have to do a micro correctly - CME needs to introduce it as a 1/10th size like the equity index contracts and brokers need to offer margins 1/10th the size with commissions similar to the equity micros.
To illustrate how it can go wrong in addition to your QM example. The micro for the US/Eur is hopeless because it does not match the same tick size. Even though brokers like AMP etc have reduced margins and commissions (following same pattern as the equity micros it's average daily traded volume is the same as it was pre the equity micros). But look at micro Gold (MGC) where it's volumes have moved from a daily average of 10k (back in April - pre equity micros) to now around 40k daily - and this has occurred since brokers like AMP etc have reduced the margin to also be 1/10th and made the commissions cheaper (they did this following the successful introduction of the equity micros).
@bone
I am with @Overnight on this one.
I just look to the success of the equity micros.
Also see my post immediately above with the different outcomes with 6e and micro 6e plus Gold and micro Gold. Micro Gold has seen substantial increase in daily volume since some brokers (AMP etc) changed the margin structure to be 1/10th the size and significantly reduced the r/t costs - they did this for both micro 6E and micro Gold (after seeing the success of the equity micros), but Gold has been the only one to see a significant increase in daily volume and I believe that is because it's tick size is the same as the main contract whereas 6E's is not.
There is something else you are not considering. Not only is the QM a cluster of a contract due to how it's tick size/value specs are fubar compared to the parent...
It is a financially settled instrument, while CL is deliverable. I feel this is far and away the biggest reason the QM has failed.
Remember, CL is a true physical instrument. You cannot play one side of the market with physical delivery, and then a smaller side with financial settlement, and expect market participants to embrace it. Oh, and the LTD between the two has a 24-hour difference! WTF!
The micro CL, to be successful, will be exactly equal to the CL, but 1/10th the size. No more, no less.
Physical delivery, 100 BBL per contract. $1 per tick at the $0.01 tick size. Termination of trading will occur on the 3rd business day before the 25th calendar day of the month preceding the delivery month. If the 25th calendar day of the contract month falls on a non-business day, trading will terminate on the 3rd calendar day before the last business day before the 25th calendar day. Or some shit like that, lol!
That's how you can make it work. And I feel very confident that it will.
What refiner would not love more granularity in their oil supplies? Topping off tanks and stuff. Emptying a bit of excess.
They can do that with the micro, rather than trying to offload, say, 300 barrels at a lower price and having to hang onto the other 700 in storage for a future date.
So they just enter a contract for 3 micros, to work their 300 barrels, and have no left-overs. You know?
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OK. The QM is financially settled.
I wonder how many physical traders are keen on micro CL.
I am sure if there is demand for micro oil physical delivery, exchange will introduce new financial instrument and earn more $$$.
They can't be keen on it, as it does not yet exist.
Mreh, you are missing the point. If I am someone who has to take, or make, physical delivery on 10,000 bbls of crude, but I have this niggling bit of 400 bbls that I would take a loss on, welp, I have to bite the bullet and deliver (or take delivery of) those extra 400 bbls to Cushing Oklahoma at contract expiration. Those are the terms of the contract.
But if I could work those extra 400 bbls of Crude with a micro, I might get a better price for those 400 with the micro contract, due to said granularity.