The difference for the transaction costs per roundtrip is huge between non members, individual members and equity member. It matters a lot for day trading and for trading spreads., with multiple legs. I understand that getting to be an individual member, is expensive. Definitely out of the question for me. I would like to know 1) Costs for being an individual member for an exchange -specifically CME/NYMEX. 2)Costs for getting to be an equity member. I do know that one can lease membership for around 900USD/month, for an individual, and it seems like a cheaper option, but what if a firm or a group of 10-50 trader want to lower their roundtrip costs . what are the options such a group/firm has , and what will be the costs Anything else i should know about.
I was going through CME rules,when i found "However, traders, including owners of the trading firm, who currently own, hold, or have owned or held trading privileges in any CME division during the two years immediately preceding their registration as a trader of the firmâs accounts cannot trade the accounts electronically" Can someone please explain this in detail- what do they mean by trading privileges. here is the link to complete article http://www.cmegroup.com/company/membership/files/ECMQA.pdf
"Trading privileges" has to do with what you can trade based on the category of membership you own/lease. At the CME, I remember there was CME (full), IMM, IOM, GEM and maybe still some other "lesser" ones. Greater "privilege/access" means a higher seat price/lease.
So what I understand is - Trading privilege = getting discount of any kind on fee? and if I had any kind of trading privilege in past 2 years, I cannot get a new privilege i.e get registered as a trader for an ECM, for discounted fee - until two years have passed? I dont see the logic behind this. must be something wrong with how i am interpreting things. So in a nutshell if i work for a firm that gets discounted fee from cme and then quit it to work for another firm which also gets the discount i have to wait two freaking years? to get fee discounts.
Getting to be an individual exchange member is not expensive for a serious trader. How much capital do you have? How many round turns a month do you do? If you don't do enough monthly volume to save 2 or 3 times the lease fee you are wasting your time looking into membership. Current lease fee by Division: CME $1900 IMM 775 IOM 325 NYMEX 850 Application fee for individual member is $2,000. Best current seat bargain is IDEM (CBOT) bid/offer $2,500/$3,500 with one lease available for $25 a month. Don't have to do too many RTs to save $25 a month.
The CME ECM is a kluge membership. Unless you really know what you are doing the ECM is to be avoided.
1) Trading privileges have to do with what you can trade, i.e. options only, stock index, currencies, livestock et al and not your fees, which should be "low" anyway from having the exchange seat. 2) As for that 2-year "restriction", my guess is that it has something to do with preventing current exchange members with floor access from trading against the ECM via the floor or electronically. :eek: 3) It might also have something to do with getting guys out of the pits and in front of the screen with a 2-year "trading vacation". 4) Contact the CME for more info.
Well i do enough roundtrips as an individual trader to go for a lease. just about. But purchasing a seat and going for a lease are two different things. I read somewhere that discounts for the both differ? I am interested in knowing what a Proprietary trading firm, specifically, can do to get discounts. Also want clarification on that rule regarding who can trade with ECM's. Seems to me that for a firm, you have to be an ECM to qalify for reduced exchange fee.
Na i doubt it , it prevents traders from trading electronically for two years. Two years is a little too long for it. i had heard about a 6 month restriction but did not have an idea about a two year timeline. Basically cant trade vs previous ECM for two years.
There is a substantial difference between commissions for a lessee and seat owner. Seats are not a bad investment with a 4-6% yield. However, there is a requirement that you own 950 shares of CME. http://www.cmegroup.com/company/files/CME_Fee_Schedule.pdf