Looking at the CME website, there does not seem to be a way for a corporat entity e.g. a hedge fund to obtain CME membership as they are specifically excluded. Only proprietary tradng firms are allowed. Now there is the individual Membership...so my qeustion is even more pertinent. Can a fund Manager obtain an individual Memberhsip, then trade and give up to the fund...without this being considered cheating or a conflict of interest??
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Thinking about CME/IOM membership
- Thread starter heech
- Start date
I think you are looking at http://www.cmegroup.com/company/membership/types-of-membership.html. Click on the drop-down box that says "Individual". You can select 3 other options. "Clearing" membership even offers discounted exchange fees for affiliated hedge funds.Quote from CPTrader:
Looking at the CME website, there does not seem to be a way for a corporat entity e.g. a hedge fund to obtain CME membership as they are specifically excluded. Only proprietary tradng firms are allowed. Now there is the individual Membership...so my qeustion is even more pertinent. Can a fund Manager obtain an individual Memberhsip, then trade and give up to the fund...without this being considered cheating or a conflict of interest??
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Quote from heech:
Yea, it can't be possible to get individual fees while giving up to a corporate account. If that was possible, there would be no corporate members.. ever. I was just confused by language in the CBOT fee schedule that said "rights of individual executing the trade".
Can your fund be a corporate member? I'm trying to understand how a fund can be a corporate member as it seems except for the "Clearing Member" category, both corporate member categories explicitly prohibit membership by hedge funds.
when i looked into it for myself to trade all the treasury futures at member rate fees it broke down this way:
just to trade my own money i had to buy an associate seat (80k ish last i checked)
to trade my along with other people's money i would have to buy a seat and purchase 1700 shares of CME- i'm surprised you haven't mentioned this requirement yet, although if you aren't trading treasury futures maybe it doesn't matter. also everyone involved would have a minimum of 250k at risk and i couldn't take more than 80% of the total profit of the group.
just to trade my own money i had to buy an associate seat (80k ish last i checked)
to trade my along with other people's money i would have to buy a seat and purchase 1700 shares of CME- i'm surprised you haven't mentioned this requirement yet, although if you aren't trading treasury futures maybe it doesn't matter. also everyone involved would have a minimum of 250k at risk and i couldn't take more than 80% of the total profit of the group.
It says it clearly on the CME site. Exact rule differs from exchange to exchange. In the CME, look at 106.H trading and 106.J equity memberships. It explicitly talks about funds and pools. CBOT would be 106.S membership.Quote from CPTrader:
Can your fund be a corporate member? I'm trying to understand how a fund can be a corporate member as it seems except for the "Clearing Member" category, both corporate member categories explicitly prohibit membership by hedge funds.
Quote from CPTrader:
Can your fund be a corporate member? I'm trying to understand how a fund can be a corporate member as it seems except for the "Clearing Member" category, both corporate member categories explicitly prohibit membership by hedge funds.
from http://www.cmegroup.com/company/membership/types-of-membership.html:
CME Corporate Membership
Description
CME corporate membership allows member firms to receive preferential Exchange fee and performance bond rates on its proprietary trading of eligible CME products when such proprietary trading activity is conducted in accordance with CME Groupâs Fee Policies.
A CME corporate member firm may be a CME Rule 106.J. Equity Member Firm (requires membership and shares) or a CME Rule 106.H. Trading Member Firm (requires a membership).
Hedge Funds, commodity pools, banks, futures commission merchants, foreign brokers, broker-dealers, commodity trading advisors, introducing brokers, commercial entities, proprietary trading firms and other corporate entities are eligible for CME Rule 106.J. equity member firm or CME Rule 106.H. trading member firm status for their proprietary trading activity.
Eligibility and Requirements
CME Rule 106.J. Equity Membership
* The equity member firm is required to own or have assigned to it 2 CME memberships, 2 IMM memberships, 2 IOM memberships, 1 GEM membership and 6,000 shares of CME Group. If the Rule 106.J. equity member firm is also a CBOT clearing or Rule 106.J./106.S. equity member or a NYMEX clearing or Rule 106.J. member firm, it must own or assign 9,000 shares. If the CBOT Rule 106.J. equity member firm has a 1,750 share requirement, the combined share requirement will be 7,750. If the clearing member is also a CBOT clearing or Rule 106.J./106.S.equity member and a NYMEX clearing or Rule 106.J. member firm, it must own or assign 12,000 shares. If the CBOT Rule 106.J. equity member firm has a 1,750 share requirement, the combined share requirement will be 10,750.
* One-half of the required Exchange Memberships (i.e. one CME, one IMM, one IOM and the GEM) and shares must be owned by the Rule 106.J. equity member firm or a person, including a parent company, with an acceptable proprietary interest in the Rule 106.J. equity member firm (i.e. "firm owned"). The remaining Exchange Memberships (i.e. one CME, one IMM and one IOM) and shares may be independently assigned.
* The "firm owned" memberships owned or assigned to the clearing member may be held by the Rule 106.J. equity member or an individual. The individual must be approved for CME individual membership.
* The Rule 106.J. equity member firm and their 100% wholly owned subsidiaries receive preferential Exchange fee and performance bond rates on its proprietary trading of all CME products when such proprietary trading activity is conducted in accordance with CME Group Fee Policies.
* The trading activity of parent companies and affiliates of the Rule 106.J. equity member firm may be eligible for preferential Exchange fee and performance bond rates if a CME Rule 106.I. Affiliate Corporate Membership is obtained.
* For hedge fund and commodity pool Rule 106.J. equity member firms, only the proprietary trading activity of the hedge fund equity member firm is eligible for preferential Exchange fee rates. However, the trading activity of up to five funds within the Family of Funds of the Rule 106.J. equity member firm may be eligible for preferential Exchange fee and performance bond rates if a CME Rule 106.S. Family of Funds Corporate Membership is obtained.
For more information:
* CME Groupâs Fee Policy Bulletin for Member Firm Accounts
* CME Fee Schedule for CME Rule 106.J. Equity Corporate Members
* CME Membership Prices
Eligibility and Requirements
CME Rule 106.H. Trading Membership
* The trading member firm is required to purchase one or lease two memberships (CME, IMM or IOM Division) in the division in which preferential Exchange fee and performance bond rates are desired. Shares of CME Group are not required.
* The membership(s) owned or leased may be held by the trading member firm or a principal or employee of the member firm. The principal or employee must be approved for CME Individual Membership.
* The member firm is eligible for preferential Exchange fee rates for its proprietary trading of products (open auction and electronic) within the division of membership(s) owned or leased when such trading activity is conducted in accordance with CME Group Fee Policies. The trading activity of parent companies, affiliates, subsidiaries or customers of the member firm are not eligible for preferential Exchange fee rates.
* For hedge fund and commodity pool member firms, only the proprietary trading activity of the hedge fund member firm is eligible for preferential Exchange fee rates and the rates do not apply to the trading activity of its investment manager, affiliated funds, investors, parent companies, affiliates, subsidiaries or customers.
Also note that in both rule 106.J and rule 106.H, it says For hedge fund and commodity pool member firms, only the proprietary trading activity of the hedge fund member firm is eligible for preferential Exchange fee rates. In plain text it means whichever entity is the equity member, only this entity get preferential fees. So, if the actual fund is CME member, the fund is eligible for preferential rates but the fund manager firm is not.
There is even special form for hedge fund membership: http://www.cmegroup.com/company/membership/files/CorpMemberHedgeFundInfo.pdf
See also http://www.hedgeco.net/news/12/2004/cme-offer-new-membership-class-hedge-funds.html
Or am I missing something?
Difference between CME equity membership (requiring CME shares - anywhere from 300k-1 mil in cost) and CME trading membership... Which does not.Quote from dumb_mother:
to trade my along with other people's money i would have to buy a seat and purchase 1700 shares of CME- i'm surprised you haven't mentioned this requirement yet, although if you aren't trading treasury futures maybe it doesn't matter. also everyone involved would have a minimum of 250k at risk and i couldn't take more than 80% of the total profit of the group.
I have no idea what you're referring to: 250k at risk, etc. Doesn't sound like a hedge fund structure, in any case.
Thanks to all for all the good info.
It seems if I have understood the material correctly:
That if a hedge fund purchases an IMM seat or leases two IMM seast they can become a 106.H Trading Member.
A trading memebr will then pay clearing fees of 0.39 for E-mini equities plus exchnage fees of 0.10 for a total of $0.49 per side as compared to $1.14 for non Trading Mmebrs. For FX products, the rate would be 0.34 + 0.10 for a total of $0.44 as compared to $1.60 for no Trading memebrs.
The savings are great, if my analysis is correct! Are my numbers correct?
However, the cost to puchase a seat (IMM) is at last trade $470,000 - which is no small investment. What is the cost to lease an IMM seat??
Thanks again to all for sharing.
It seems if I have understood the material correctly:
That if a hedge fund purchases an IMM seat or leases two IMM seast they can become a 106.H Trading Member.
A trading memebr will then pay clearing fees of 0.39 for E-mini equities plus exchnage fees of 0.10 for a total of $0.49 per side as compared to $1.14 for non Trading Mmebrs. For FX products, the rate would be 0.34 + 0.10 for a total of $0.44 as compared to $1.60 for no Trading memebrs.
The savings are great, if my analysis is correct! Are my numbers correct?
However, the cost to puchase a seat (IMM) is at last trade $470,000 - which is no small investment. What is the cost to lease an IMM seat??
Thanks again to all for sharing.