Say No To Thin E-mini Spread

Minime · Dec 12, 2002

Quote from estrader:

I believe you are mistaken . QQQ has a lot more volume than SPY. So number of stocks in an index has nothing to do with volume.

I was speaking of the emini's. The ES has double the volume the NQ has (if I recollect correctly).

estrader · Dec 12, 2002

Quote from Minime:

I was speaking of the emini's. The ES has double the volume the NQ has (if I recollect correctly).

Let me ask you. If you like .10 spread why not trade NQ emini instead of "costly" ES emini?

Ditch · Dec 12, 2002

Quote from PuffyGums:

The answer is...

The tick in the big contract is worth $25. With the emini it is now $12.50.

You are proposing that the tick be changed to $5. With CME non-member clearing house fees something like $2.80 plus broker commissions, only member traders could trade that spread profitably. You are proposing a 'CME floor trader full employment act.' You are really for the big guy all the while pretending to be for the little trader.

Secondly you are also arguing for less liquid markets with your lower tick size. How would that be better?

I think lower CME-commssions is a much more urgent issue the the spread, especially on the NQ, where the profit/commission ratio has deteriotated tremendously the last two years.

nitro · Dec 12, 2002

Quote from estrader:

If you dont like ES e-mini spread, you could always trade NQ e-mini. It has .10 spread, of course it has less volume because of that too. Build up a product, and then we will come in and mess with it. Also if you like an even thinner spread (0.000001) you could trade SPY,QQQ, DIA. There are so many to chose from.

Exactly.

Leave the e-mini spoo alone. Or if kiddies want to play with dime spreads, invent the e-e-e-mini for them, and call them the weenies.

I vote for lower comissons though!!

nitro

Tea · Dec 12, 2002

Quote from PuffyGums:

The tick in the big contract is worth $25. With the emini it is now $12.50.

The S&P Emini is 1/5 the size of the pit contract so comparing dollar value of a tick move the way you are is disingenuous.

Quote from PuffyGums:

You are proposing that the tick be changed to $5. With CME non-member clearing house fees something like $2.80 plus broker commissions, only member traders could trade that spread profitably. You are proposing a 'CME floor trader full employment act.' You are really for the big guy all the while pretending to be for the little trader.

You are really reaching deep trying to come up with convoluted logic and FUD (fear, uncertainty and doubt) to preserve an archaic system. The non-members fees of the Emini would be the same if the tick increment were .10 or .25

Saying that somehow I am for the big guys and against the little guy (I am a little guy by the way) because I want to reduce my trading costs and narrow the spread is just more FUD and shows how desperate you guys are.

Quote from PuffyGums:

Secondly you are also arguing for less liquid markets with your lower tick size. Tell me why less liquidity would be a good idea.

Reducing the tick increment in the Emini market will increase it's liquidity as more medium sized hedge funds shift their S&P business to the Emini market due to reduced costs. Also, there would be more Emini scalpers, as their profitability would go up due to lower costs per transaction.

Lets face it, the big scare for CME floor traders is that if the tick increment were the same for the pit contract as the Emini, it would shift business to the emini which would be a good thing for all Emini traders.

LongShot · Dec 12, 2002

Quote from nitro:

Exactly.

Leave the e-mini spoo alone. Or if kiddies want to play with dime spreads, invent the e-e-e-mini for them, and call them the weenies.

I vote for lower comissons though!!

nitro

HAHAHAHAHA

Trade The WEENIES!!

Tea · Dec 12, 2002

Quote from Ditch:

I think lower CME-commssions is a much more urgent issue the the spread, especially on the NQ, where the profit/commission ratio has deteriotated tremendously the last two years.

If you can save $7.50 per Emini S&P transaction in slippage due to a .10 tick increment vs. .25 - how would that be less urgent/important than saving $2.80 in CME fees?

Minime · Dec 12, 2002

Quote from PuffyGums:

The answer is...
The tick in the big contract is worth $25. With the emini it is now $12.50.
You are proposing that the tick be changed to $5. With CME non-member clearing house fees something like $2.80 plus broker commissions, only member traders could trade that spread profitably. You are proposing a 'CME floor trader full employment act.' You are really for the big guy all the while pretending to be for the little trader.
Secondly you are also arguing for less liquid markets with your lower tick size. How would that be better?

So your assumption is people that live on the spread create the liquidity in these markets? If that's true then I'd agree with your argument, but I find it hard to believe that a significant part of the volume is traders capturing the spread. Do you have data to support this?

Ditch · Dec 12, 2002

Quote from Tea:

If you can save $7.50 per Emini S&P transaction in slippage due to a .10 tick increment vs. .25 - how would that be less urgent/important than saving $2.80 in CME fees?

i really can't judge the arguments pro/con, i think there's validity in both of them. I do know that e-mini volume has sky-rocketed, markets have gone down, fees have stayed the same, ergo the CME is making big bucks, the trader's transaction costs have increased relative to his profit potential, can't see this is a fair situation.

Ditch · Dec 12, 2002

If you can trade e-mini Dows for $2/RT on the CBot, don't tell me the CME can't match that on the ES/Nq.