2-Year Note Futures Tick to Be Reduced by Half, Effective Jan 13

Discussion in 'Financial Futures' started by ETJ, Jan 7, 2019.

  1. ETJ

    ETJ

    [​IMG]

    2-Year Note Futures Tick to Be Reduced by Half, Effective Jan 13
    As a reminder, CME Group will reduce the minimum price increment for 2-Year Treasury Note futures by half (to 1/8 of 1/32nd) effective Sunday, January 13, 2019.

    The decision to reduce the minimum tick was prompted by client demand, broad market validation and analysis of resting liquidity.

    For more information, the following resources are available:

    ➜ Client Impact Assessment

    ➜ Special Executive Report (SER)
     
  2. eurusdzn

    eurusdzn

    Who loses here with this adjustment?
     
  3. Robert Morse

    Robert Morse Sponsor

    I would think a MM would prefer wider tick sizes. I know I would if I were an automated MM.
     
  4. maxinger

    maxinger

    This is bad !!
    It make the trading ladder even much more longer.

    In certain cases, it increases the number of digits.
    look at jpy price. it is now at
    0.0092450
    ie 8 digits.
    Old people like me wouldn't be able to see those numbers clearly.

    I like crude oil (48.85) and Natural Gas (2.970) the best.
    Tick size just nice, and only 4 digits
     
    Palindrome likes this.
  5. Thank you for this heads-up. Reading the documentation I get the impression that this is only being done for the 2-year notes, not for any other instrument. The 2-year notes seem to function as guinea pig to test whether all systems are able to handle nine digit accuracy.
     
  6. MarkBrown

    MarkBrown

    all for reduced tick size but they need to translate that into something simple. in the old days we traded bonds in 32/s and it was quoted that way as well. but i guess moobeam programmers never learned fractions as the old guys died off.
     
    dano0726 likes this.
  7. Robert Morse

    Robert Morse Sponsor

    I hated learning fractions. I had to hand signal them and do the math quickly. Not my best quality. A typical order was XYZ, July 45, buy calls, sell puts 7/16 credit 100X-GO. I'd have less than a 30 seconds to get to the option post, find the strike, do the math and tell the specialist what I wanted to do on the two legs before 5 other brokers ran in to take advantage of put/call parity being off. Equity options not futures.
     
  8. MarkBrown

    MarkBrown

    i'm a carpenter by trade lol. so i love fractions maybe that's why i specialized in trading bonds, i just understood it and it was familiar.
     
    HelloDollar likes this.
  9. Robert Morse

    Robert Morse Sponsor

    I was much better at working reversals for customers not held. I would stand in a busy crowd, knowing what the customer wanted to do with their limits, and bid for calls. Puts were easy to sell as there were always bids. Then have the customer do the stock as I bought calls. It was fun and taught me a process before I started to trade for myself. I was able to do them for net credits or even and Fed Funds were well over 10% back then. Fun!!
     
    MarkBrown likes this.
  10. bone

    bone

    This will likely ruin what was left of the market in the futures. It might benefit the basis traders - but only if they get filled. And therein lies the problem. You aren't going to find locals to buy bids and sell offers (make markets) at such narrow bid-ask spreads. It might also benefit inter market spreads if there is liquidity available at that level of granularity. But again, you're going to have a very hard time attracting consistent market making at that granularity and if a local scratches a thousand or more futures a day just to make 1/8th tic you've worked for the CME and your FCM and pocketed very little for yourself.

    The math for liquidity providers is not good.
     
    #10     Jan 8, 2019