No idea but it's definitely a lot higher than 3-4%, I'd guess it's somewhere in the 20-30% range on NYMEX...
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Nat Gas trading
- Thread starter Scec
- Start date
natgas is fine but delivery days are awful.
xactly. there is a lot to be said for the level of communication that open outcry gives. is it a good trade, to sacrifice all that for a cheaper, electronic fill. for some...as you say. but not for the majors.Until this mentality changes, the screens will play second fiddle to the pit. Honestly, the only people I know hoping that the NYMEX goes electronic are the funds that only trade electronic markets and retail traders.
Quote from aPismoClam:
xactly. there is a lot to be said for the level of communication that open outcry gives. is it a good trade, to sacrifice all that for a cheaper, electronic fill. for some...as you say. but not for the majors.
The major oil companies do the majority of their trading in the OTC markets.
One thing that can't be emphasized enough...The vast majority of the volume in commodities (both exchange traded and OTC) is commercial and most commercials prefer to do business via the phone. Until this mentality changes, the screens will play second fiddle to the pit. Honestly, the only people I know hoping that the NYMEX goes electronic are the funds that only trade electronic markets and retail traders.
I think you are overestimating the volume traded over the phone (voice brokers and direct dealing) vs the screen. I think the vast majority of commercials prefer using the screen because it gives them an equal footing as far as prices and liquidity is concerned. Too many times commercial traders are 'read' by price makers and do not get the best prices available. They also are many times frustrated by when trying to transact on the floor. (Look at the IPE's growth of volume; up 30% since it went all electronic in April)
The best example of this is in the Power Market. The only business being done by phone in Power these days are derivatives, because they are hard to transact on a screen (too many variables usually). Otherwise, 70% or more of power volume trades on a screen, and most business is done by commercials, very little spec or retail in Power trading.
I think you are overestimating the volume traded over the phone (voice brokers and direct dealing) vs the screen. I think the vast majority of commercials prefer using the screen because it gives them an equal footing as far as prices and liquidity is concerned. Too many times commercial traders are 'read' by price makers and do not get the best prices available. They also are many times frustrated by when trying to transact on the floor. (Look at the IPE's growth of volume; up 30% since it went all electronic in April)
The best example of this is in the Power Market. The only business being done by phone in Power these days are derivatives, because they are hard to transact on a screen (too many variables usually). Otherwise, 70% or more of power volume trades on a screen, and most business is done by commercials, very little spec or retail in Power trading.
Quote from btubroker:
I think you are overestimating the volume traded over the phone (voice brokers and direct dealing) vs the screen. I think the vast majority of commercials prefer using the screen because it gives them an equal footing as far as prices and liquidity is concerned. Too many times commercial traders are 'read' by price makers and do not get the best prices available. They also are many times frustrated by when trying to transact on the floor. (Look at the IPE's growth of volume; up 30% since it went all electronic in April)
The best example of this is in the Power Market. The only business being done by phone in Power these days are derivatives, because they are hard to transact on a screen (too many variables usually). Otherwise, 70% or more of power volume trades on a screen, and most business is done by commercials, very little spec or retail in Power trading. [/B]
Perhaps my view is skewed as most of my contacts and I aren't trading/broking vanilla swaps, most are traded long-dated products and/or options. If you're trading vanilla products ICE is probably your best friend, but not so if that's not the case.
Is ANYONE trading on Clearport? The only people I know using Clearport (my shop included) are only using it for clearing.
For what it's worth, several of the OTC brokers I know are having record years in terms of revenue, simply because overall trading volumes are up significantly, in all products.
I agree, power is definitely the leader of the screen.
I'm an advocate of screen based trading but I think it will be at least several more years before screen based trading dominates the US market, primarily because the ICE and NYMEX platforms are poor at best.
What's interesting is that excluding ICE, all of the electronic platforms either failed or have little to no liquidity: TradeSpark, HoustonStreet, Bloomberg Powermatch, etc.
I think there's a huge opportunity for someone to create a solid platform that's linked to NYMEX for clearing, as NYMEX will most likely never be able to offer a decent platform (access has been around for years and it's terrible at best).