minimizing commissions

B

bb123

I have some very basic questions.

I trade futures and options on futures on CME and have been using IB as my broker. I have had a decent performance for a while (Sharpe of 2.8 etc.), but transaction costs is a critical element of my strategy, and reducing that can help my realized performance more. I have been happy with IB, but exploring ideas to see how to reduce my transactions further.

My focus in on commodities.

I have a few hypothetical questions. Right now I am trading 1k-5k contracts per month, but suppose my volumes increase to 10k-20k per month.

I have been thinking ...

(1) One option is to get a CME IOM membership to reduce my exchange fees and continue using IB (reduce the exchange fees). Happy and familiar with IB

(2) Second option is to get a CME IOM membership, but execute directly on CME Direct, and then use a clearing broker (FCM) to clear the trade (and thus reduce both the execution and exchange fees, and only pay clearing costs to a broker).

I know that in the institutional world many FCMs like Newedge, BAML support clearing-only services ("clearing broker"), where one can execute elsewhere with an "execution broker" and then "give up" to Newedge and BAML etc.

I usually prefer code my own algo in Python and execute on IB using Python's IbPy toolbox (based on IB Gateway). Thus my EMS is my own codes in Python.

This may be a silly basic questions:

(i) if I take an exchange membership like CME IOM, and trade on CME Direct, then is that the same as I becoming my own "execution broker" ?

(ii) When I read about other traders using CQG QTrader or TT or Fidessa etc., in combination with say ADM, or AMP, or other FCMs, in such cases is CQG or TT or Fidessa essentially providing the "execution" services, while ADM, or AMP, or FCStone, or other FCMs' fees are charging for the "clearing" services?
 
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You can shop around and get .5 / .10 per side through a few FCMs won't reduce your exchange fees but the fcm will help you get set up leasing a seat
 
AMP for entry level trading. This all depends on your account size as it does for every1.

AMP, I'm suprised you are even over at IB if your worried about fees. They may be cheap compared other brokers however there is MUCH cheaper with AMP and the other usual suspects.

I like AMP best as I've had a really good run with them and they JUST RELEASED OPTIONS!! How good is that? :thumbsup:.

Were u using TWS? I like qtrader the best. Ahhhh TWS.... now there are some memories :).
 
Hi, happen to see your other posts where tradovate offered you free month of live trading. Did you try it out and what do you think about tradovate now?

CBC said:
AMP for entry level trading. This all depends on your account size as it does for every1.

AMP, I'm suprised you are even over at IB if your worried about fees. They may be cheap compared other brokers however there is MUCH cheaper with AMP and the other usual suspects.

I like AMP best as I've had a really good run with them and they JUST RELEASED OPTIONS!! How good is that? :thumbsup:.

Were u using TWS? I like qtrader the best. Ahhhh TWS.... now there are some memories :).
More...
 
These are all separate issues and are unrelated.
  • If it makes sense to lease a seat on the CME, you should do that.
  • If you like CME-Direct-I do too, you should use that but you need an FCM to set risk and enable trading. You can't use CME-direct then allocate to any FCM. Does not work that way without an account to trade in.
  • If the cost of trading is all that is important to you, your should know that trading options and taking overnight positions will increase your cost at most FCMs. Smaller FCMS tend to offer lower rates but hate overnights.
  • The last part, I don't follow. Every FCM will charge you a commissions to enable your trading. You can't execute on any of those platforms, or any other, without having an account to trade in and an FCM setting risk. You can execute at one FCM and then Give up the trade to another, but that will increase your fees not decrease, as each FCM/Broker will charge you a commission.
BTW, you name larger FCMs like ADMIS, Newedge (now SocGen), BAML (ML). ADMIS is not the low cost alternative. We use them for larger accounts that are willing to pay more for their balance sheet and depth of services. SocGen and ML and every other large bank FCM, has minimum account sizes, Minimum commissions per month and sometimes asks for a personal guarantee or a large balance sheet for you LLC/personal net worth.

Bob
 
CBC said:
AMP for entry level trading. This all depends on your account size as it does for every1.

AMP, I'm suprised you are even over at IB if your worried about fees. They may be cheap compared other brokers however there is MUCH cheaper with AMP and the other usual suspects.

I like AMP best as I've had a really good run with them and they JUST RELEASED OPTIONS!! How good is that? :thumbsup:.

Were u using TWS? I like qtrader the best. Ahhhh TWS.... now there are some memories :).
More...


Quick question about AMP. I noticed on their site that they have their own clearing AMP Global Clearing. But I didn't see them on the list of CME clearing firms over here: http://www.cmegroup.com/clearing/financial-and-regulatory-surveillance/clearing-firms.html

Who do they clear with?
 
pbanerjee said:
Quick question about AMP. I noticed on their site that they have their own clearing AMP Global Clearing. But I didn't see them on the list of CME clearing firms over here: http://www.cmegroup.com/clearing/financial-and-regulatory-surveillance/clearing-firms.html

Who do they clear with?
More...

They look like a clearing FCM to me.

http://www.cftc.gov/idc/groups/public/@financialdataforfcms/documents/file/fcmdata0217.pdf

We don't do business with them, so I don't know if they also partner with a larger FCM for certain business.
 
pbanerjee said:
Seems like the CME website is out of date
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Not really. CFTC list is of all registered FCMs. CME list is all clearing members. You can be an FCM but not a member of the CME. The FCM can use a carry broker to get access. The carrying broker is the member. The cost for smaller FCMs to be members of exchanges is too high. In fact many mid sized US based FCMs use Carrying brokers to do business overseas.

https://www.futuresknowledge.com/dictionary/carrying-broker/

Bob
 
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