Why being an Exchange member ?

Hey guys,

Well, I'm doing some research about all pros of being an exchange member (like the CME). I don't trade US index but a friend told me all CME members are right of way in the orderbook waiting line with CME product. Is that true ? What are the others pros ? All company got those ? Why there are some leasing, there is a limited number of licence ? How much it cost ? Where could I find the right documents to get all these informations...

Thanks a lot !

After

 

Your friend misled you. There's no queue jumping for members. Full membership is prohibitively expensive as an individual, but a lease often makes sense if you're doing say 500 plus round trips a month on a subset of contracts. That's just an example because you mentioned indices, it varies. Savings are better for futures than for options.

 

It simply saves you money on fees. You can look on the CME website for leasing fees. I have one client that pays $350/month. That lease covers the indexes like ES (I'm not sure what else). There is also a one time fee to transfer the lease. I'm not sure what that value was, but it was around $300/$350. When you are a member, you don't have to pay the NFA fee which is currently $0.01/side. You can examine the CME rate sheet attached to see what you can save. (I did this earlier in the year and did not check the fees for any change)

 

Something to note is the substantial increase in data fees with your professional status.

Best to seek accounting advise, but you may have to register and trade with that membership under a Trust or LLC to avoid a professional designation in different products/accounts/brokers.

If anybody is working under this setup, please confirm.

 

Xandman,

http://www.cmegroup.com/market-data...it-a-to-schedule-4-non-pro-self-cert-form.pdf

Bob

 

According to (c) must not be a member of ANY exchange.

However, I am still not sure if you can bypass this via creation of a separate entity.

 

No, you can't.

 

Oops. I skimmed thru the document while browsing on my phone.

(d) be registered or qualified as a professional trader or investment adviser with any stock, commodities or futures exchange or contract market, or with any financial regulatory authority

 

Cost of doing business. No body likes the fees but it is the only business in the world where you can make a good living with this low an overhead.

 

Access to the order flow..., and likely source of said flow

Reduced fees

RN