Say No To Thin E-mini Spread

[estrader]

There is an effort underway by some malicious elements ( some even post on this site) to trim the E-mini ES spread to 1 penny from a quarter now. This is going to hurt many of us who moved away from trading stocks after decimalization. Dont let them take away another good trading vehicle from you, because there is no reason for this thinning of the spread. Voice your discontent loud and clear. Write to CFTC, write to its chairmain:

James E. Newsome
Chairman
CFTC
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581

 

[Gordon Gekko]

i'm not a fan of spreads, anyway. why should people have immediate losses when they enter a trade just because you like to take advantage of it? i'm not saying there's anything wrong with what you do, but i think spreads should be smaller across the board. really, if i buy an ES contract right now at the ask and sell it immediately at the bid, why should i have to lose a basically mandatory .25??? just so you can profit!?

 

[Minime]

Scalpers have no long-term viability in the ES, so screw-em in the ground I say. Make the spreads what the market will make them. Promoting inefficiency is a socialist idea.

 

[chisel]

Quote from estrader:

There is an effort underway by some malicious elements ( some even post on this site) to trim the E-mini ES spread to 1 penny from a quarter now.

Call me malicious, but at the very least the tick size should be cut to .10.

How does reducing the tick size hurt anyone besides the arb guys on the floor? I vote for tighter spreads. Who's with me?

 

[Minime]

Quote from chisel:



Call me malicious, but at the very least the tick size should be cut to .10.

How does reducing the tick size hurt anyone besides the arb guys on the floor? I vote for tighter spreads. Who's with me?

.10 would be good. That will kill the pit real fast!!!

 

[estrader]

There 10000 stocks with spread as thin as 0.001 of cent. Why dont you trade them, then. Because you have to wait longer for more ticks to break even after commissions. Why you like emini? because 1 tick and you cover all your costs and make a small profit. This is why it became so popular after stock decimalization. There should be trading vehicles for every taste - for those who like thin spreads thousands of stocks, for those who like thick spreads a handful of e-minis. I think that is fair.

Those of you who are gleeful to see the pit traders killed, are more concerned about them hurt, then making your own money. This is jealousy and socialism.

 

[Tea]

Quote from estrader:

There is an effort underway by some malicious elements ( some even post on this site) to trim the E-mini ES spread to 1 penny from a quarter now. This is going to hurt many of us who moved away from trading stocks after decimalization. Dont let them take away another good trading vehicle from you, because there is no reason for this thinning of the spread. Voice your discontent loud and clear. Write to CFTC, write to its chairman:

James E. Newsome
Chairman
CFTC
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581

This has got to be the most ridiculous post I have seen to date. You are trying to convince other ES traders that it is in their interest to have higher costs, more friction in their trading.

You are either a lunatic or you are a CME member of some sort who benefits from having an artificially wide tick increment in the S&P emini market.

The argument I made back in October is that the tick on the S&P emini should be the same as the tick size on the pit traded contract - they both should be .10. There is no reason to discriminate against the smaller emini trader.

The original justification for having a wider tick for the Emini when it was launched was that arbitrage between the emini and the pit would provide liquidity to the electronic market.

However, because the emini records its prices faster and has in effect taken over the role of short term price discovery from the pit contract - the arbitrage now goes mostly from the pit to the Emini (the opposite of what was intended).

One possible negative affect of this reverse arbitrage is that the spreads on the pit contract may be getting wider as a result as the pit traders widen their spread so they don't get picked off by the pit based Emini arbitrageurs.

This cannot be good for the market. The CFTC should step in a demand that the minimum tick size be .10 for both the pit and emini. If the market sets a wider spread during times of lesser liquidity (lunch etc) thats fine.

Let the market work as it should. Free markets for free people.

PS. thank you for including Chairman Newsome's address. I encourage anyone who wants to reduce their trading costs to take the time to write a letter to him to have parity in the tick size for the pit contract and the EMINI.

 

[qdz]

Oops, backfired.

My take is this. Let the market decide it. That is the fairest way in my opinins. No need to ask regulators and/or exchanges to impose even one unnecessary rule. We've already have so many (unfair) rules favoring market makers and specialists. If the market favors going againt them, why cannot them be adaptive? Learn trading (again), would you?

 

[PuffyGums]

Hey if you guys cant handle a $12.50 tick then you should not be trading at all. I think I understand now. You don't want a trading vehicle with which you can make a living, you want a toy, some entertainment.

Do you all live in a homeless shelter such that making $40 a day would be adequate for your daily expenses plus some savings?

 

[Tea]

Quote from qdz:

Oops, backfired.

My take is this. Let the market decide it.

Exactly!

Let the market decide it. If the minimum tick size is reduced to .10 on the Emini and the liquidity demands a spread wider than .10 - then let the market decide from that point what is proper.

To artificially set a wider tick size than the market demands is in effect anti-market or communistic.

Free markets for free people!