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

Quote from thesniper:

Why doesn't ICE or some other exchange launch a competing product to ES? Does CME have a monopoly on S&P 500 futures?
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Obviously there are other US equity futures contracts; some have been around for decades. WRT CME's licensing agreement with S&P, let me Google that for you -

http://www-eq.standardandpoors.com/spf/pdf/index/092305_CME-release.pdf

CME, Standard & Poor’s Announce Extension of Exclusive License for S&P Index Futures Contracts

Organizations Mark 25-Year Association by Extending Exclusive Agreement Through 2016, with Another Non-Exclusive Year in 2017
 
It would certainly make a lot of sense for the CME and the feds to push for a 50 cent tick instead of 25. There is a huge complaint that HFT is dominating the market in both directions.

Hedgers wouldn't care about the tick increments. They just want to offset risk. Speculators that use HFT would increasingly find that they couldn't push through much thicker levels. As a result, the risk of buying and selling within seconds purely for speculation reasons would lose its appeal due to the large spreads. Finally, limit orders have a better chance to be executed without slippage.

I do doubt they will change it to 50 cents, but if the feds were smart enough, they would urge the CME to do so.

As for the commision argument, well thats a bit laughable. You are arguing whether a retail customer who is not a member of the CME and who (all retail customers combined) make up a TINY percentage of volume traded, should be more important than all the other players in the market. There is the YM contract thats seems more suited for your purposes.... A cheaper seat, a tiny tick, and whipsaw action.


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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I guess it's time for my annual plea/gripe for the big SP contract to trade electronically during RTH.

I know it's a money grab on the ES being more profitable to the CME, so it won't happen, just wish it would.
 
If it ain't broke don't fix it. I remember when 500k a day was big, now 5mil is. Clearly the market has spoken.

If you want a smaller $/tic go to NQ or TF
 
Quote from joneog:

If it ain't broke don't fix it. I remember when 500k a day was big, now 5mil is. Clearly the market has spoken.
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Exactly. Reminds me of an article I once read, author was imagining someone from 100 years ago listening to a modern-day American complain about the lousy food on his most recent air flight, and thinking "you can travel coast to coast in five hours, and you complain about <i>the food</i>"...?... ES contract enables anyone to trade huge size on a single tick of 1/4 of 1/10 of 1% of notional value. The most liquid equity instrument in the history of mankind.
 
Quote from Rodney King:

Exactly. Reminds me of an article I once read, author was imagining someone from 100 years ago listening to a modern-day American complain about the lousy food on his most recent air flight, and thinking "you can travel coast to coast in five hours, and you complain about <i>the food</i>"...?... ES contract enables anyone to trade huge size on a single tick of 1/4 of 1/10 of 1% of notional value. The most liquid equity instrument in the history of mankind.
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reminds me of this...

<iframe width="420" height="345" src="http://www.youtube.com/embed/8r1CZTLk-Gk" frameborder="0" allowfullscreen></iframe>
 
re: Why does CME have a Monopoly on S&P500 futures?

Because they pay a license fee to S&P for the exclusive use of their name in their product.

If ICE wants, they can create their own 500 stock index and call it the ICE 500, but I bet you it will get 0 to little notice.
 
Quote from Trader KGB:

I guess it's time for my annual plea/gripe for the big SP contract to trade electronically during RTH.

I know it's a money grab on the ES being more profitable to the CME, so it won't happen, just wish it would.
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This would be a good solution as well. If the large contract traded electronically with the 0.10 tick size then no doubt it would probably take most of the volume away from ES. Open out cry in 2011 is just plain stupid.
 
I have yet to see the e-micro currency contracts take off. Why hasn't all the volume moved over there since commissions are only $1 and the contract size is 1/10 the big contracts?
 
Quote from PocketChange:

I have yet to see the e-micro currency contracts take off. Why hasn't all the volume moved over there since commissions are only $1 and the contract size is 1/10 the big contracts?
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Because they are a rippoff. If the regular contract cost $5 to trade roundturn then the e-micro at 1/10 the size should cost $0.50 for roundturn not $2 roundturn. That is an obvious rippoff and no one is that dumb.
But anyway, this has nothing to do with tick size in ES.
 
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