THX BUNDLE, this is what is called a "reverse desk" as well. putting fear into the market using your reputable name and trading the opposite direction later...
Had not really thought of that - but its true. Instead of punishing the bandits - they are punishing the calvary who are coming to the rescue. As said in another post, the problem IMHO is a speed imbalance. The exchanges either need to slow down the futures contracts when the premium surges (mini-halts) OR speed up the arbing process. Between the two alternatives - speeding up the arb (laying off risk - buying/selling the pit contract or a basket of stocks or options) - is less disruptive. So how do you speed up the arb?
Looks like the boneheads have figured out a way to screw over the customers who still use the pit. No wonder why the electronic contract keeps growing. The price differential referred to in the second paragraph is mostly attributed to the difference in the spread between the Emini and the pit contract. Time to reduce the tick increment to .10 for both.
fairness always seeks its own level, prop traders by the dozens are moving out of those shops and moving into the Emini pits... Wonder why?
More games of one kind or another per day in the ES than in all of Las Vegas. Nice to see at least some of you have a clue.
Nice post, Pabst. That sums up the entire situation perfectly. Incentives are all screwed up. Until the exchanges stop providing rewards for those who cause illiquidity, and stop punishing those who provide liquidity during the price panics the situation won't change. All the software tweaks in the world (like the one that is intended to prevent cascading stop orders at the CME) won't work, because the root problem isn't being addressed. It would be nice is we had a way to shame the CME into ending the practice of busting trades. Like getting an online petition going, and getting some news coverage. Let Kudlow and Cramer duke it out with the CME brass on live television.