Why does CME have a Monopoly on S&P500 futures? Have they patented ES futures?

T

thesniper

I still can't understand why CME has stuck to the 0.25 tick size at $12.5/tick for ES futures. I think switching the tick size from 0.25 to 0.10 and having a $5/tick makes much more sense and would attract a lot more HFT volume as tick movements would double and slippage would be cut in half.
I doubt CME will ever change anything to do with ES because they have no competition. Why doesn't ICE or some other exchange launch a competing product to ES? I think if they go with a 0.10 tick valued at $5 and lower commissions they can easily take nearly all of the volume away from ES.
Does CME have a monopoly on S&P 500 futures? Or do these futures have patent protection which prevents competition?
 
Quote from thesniper:

I still can't understand why CME has stuck to the 0.25 tick size at $12.5/tick for ES futures. I think switching the tick size from 0.25 to 0.10 and having a $5/tick makes much more sense and would attract a lot more HFT volume as tick movements would double and slippage would be cut in half.
I doubt CME will ever change anything to do with ES because they have no competition. Why doesn't ICE or some other exchange launch a competing product to ES? I think if they go with a 0.10 tick valued at $5 and lower commissions they can easily take nearly all of the volume away from ES.
Does CME have a monopoly on S&P 500 futures? Or do these futures have patent protection which prevents competition?
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Huh? HFT's already dominate the ES market. Most guys I know want the tick value to go up, not down. The YM has a $5 tick and no one trades it. It's just not commission friendly for very active traders. Also .10 ticks reduce the size on the book for ES. There is not a chance in hell they make the tick smaller. If anything, they should match the contract specs of the big contract at $50 a tick.
 
The intellectual property in the S&P500 belongs to S&P, not CME. I am not sure what protects it, patent or trademark.

When the ES started trading, the SP (pit traded) was 500/point, making the ES one-tenth the size. That was a problem for the major players because it cost ten times as much to trade it. Now the SP is 5x bigger, but the action has shifted to the ES anyway because of speed. But the problem remains that it costs more to trade the ES. They did reduce the minimum tick of the NQ however.
 
Quote from thesniper:

I still can't understand why CME has stuck to the 0.25 tick size at $12.5/tick for ES futures. I think switching the tick size from 0.25 to 0.10 and having a $5/tick makes much more sense and would attract a lot more HFT volume as tick movements would double and slippage would be cut in half.
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YOU'RE LAUGHABLY WRONG AND DON'T UNDERSTAND TRADING. If they increased the tick size from 0.25 points to 0.10 slippage would SOAR.

Right now the ES is great; generally very little slippage. Your idea is terrible.

DO us a favor...instead of ripping on CME, which puts out the only trade-able products (FU, NYSE, Nasdaq!), why don't you go 'scalp' in RBOB Futures, and see how much a $4.20 tick size gets you.

GL.


......or go trade the electronically traded SP, which still trades in 0.10 points.
 
Quote from Maverick74:

It's just not commission friendly for very active traders.
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I don't get that statement. Please explain. Do you mean volume discounts in that you cant do much size on the YM. That makes sense if thats what you're refering to.
 
Again the question is: ES does 2 million contracts a day (my guess). Why aren't other exchanges competing for this volume? My guess is S&P gave an exclusive license to CME for the S&P 500 futures products.

The market cap for Dow 30 is only 30% of the s&p500 so there is no way YM volume would ever be more than 30% of ES volume. But YM doesn't even trade 30% of ES volume because YM is a large cap index with much less volatility than S&P 500. For the same amount of margin YM's ATR is much smaller than ES. So ES gets more volume because of the larger market cap of the sp500 index and because of higher volitility - NOT because higher tick size! YM is much easier to scalp because of much higher tick movements and you can use much tighter stops. Also slippage is not a problem and never will be for 99% of traders.
 
lets trade it at 1 cent tick. so when you're wrong. like when you go to the bathroom and you come back and its moved against you, you only lose the 1 cent.

lincoln-penny-large.png


My Slippage
 
ES should trade 0.1 pts per tick, like the big SP contract.

This would mean there would be about 1000 contract depth at each 0.1 level instead of around 3000 at every 0.25 level it has now (during regular liquid trading hours).

Our limit orders would more likely get filled.

The value of each 0.1 tick should also be increased to $10. This will never happen as CME will lose fees :mad: (They could just double their charges for ES at the same time they introduce this change).

If they introduced both these changes then the ES would be like the TF (Russell 2000) futures contract except there would be about 500 contracts at each depth level instead of the 50 or so that TF has.
 
And yet another post saying to change the ES. These posts show up a few times a year, every year it seems.

Let's see.... one of the largest contracts traded @ the CME, generates huge business for them -- and you suggest they change it?

:D

What they need to fix are the contracts no one is interested in, not one of the most popular contracts they have.
 
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