What is with exchange fees...

[Sig]

Liquidity attracts liquidity. This is the ICE's (and others) natural monopoly.

Absolutely, having run a similar business myself I find it an outstanding niche to be in. There's nothing illegal or wrong about setting yourself up in such a business, it's really just the sign of a good business decision.

 

[pyradius]

True, and not all monopolies are illegal. Certainly not a cut and dry discussion. In many cases, these exchange fees have been in place for quite a while, but brokers were hiding those fees as long as you maintained a certain amount of trading activity.

I have certainly witnessed a steady increase in exchange fees (especially futures markets) that seem to have coincided with market consolidation. However, I would think that as a futures trader, the covering of said fees would be more than covered by 1 good trade) even as a retail trader.

Here's a slightly amusing example of the strength of liquidity attracting liquidity.

http://www.reuters.com/article/us-cme-cocoa-idUSBREA400FW20140501

http://www.wsj.com/articles/cme-def...ntract-against-industry-complaints-1453814477

Now go look at CME cocoa volume today. A big fat zero.

 

[Sig]

True, and not all monopolies are illegal. Certainly not a cut and dry discussion. In many cases, these exchange fees have been in place for quite a while, but brokers were hiding those fees as long as you maintained a certain amount of trading activity.

I have certainly witnessed a steady increase in exchange fees (especially futures markets) that seem to have coincided with market consolidation. However, I would think that as a futures trader, the covering of said fees would be more than covered by 1 good trade) even as a retail trader.

Here's a slightly amusing example of the strength of liquidity attracting liquidity.

http://www.reuters.com/article/us-cme-cocoa-idUSBREA400FW20140501

http://www.wsj.com/articles/cme-def...ntract-against-industry-complaints-1453814477

Now go look at CME cocoa volume today. A big fat zero.

It actually baffles me how these guys throw products up with a "build it and they will come" attitude. We hustled hard to get both buyers and sellers to the table and liquidity certainly didn't make itself. That said, after hustling for it I didn't feel bad when others failed with a CMEesque effort to compete.

 

[xandman]

Unless you have found an edge, there is no reason to trade anything but the most liquid CME futures products.

We need to stop supporting these silly fees, even brokers get pressured to enter these markets to provide a "complete" offering.

 

[i960]

Unless you have found an edge, there is no reason to trade anything but the most liquid CME futures products.

We need to stop supporting these silly fees, even brokers get pressured to enter these markets to provide a "complete" offering.

ICE does huge volume/OI in both Brent and Gasoil and it behooves people to not be stuck with *only* CME as the only game in town. ICE jacking up fees is one thing, but CME being the only player around would probably be worse in the long run.