Auto Trading Bites The Dust?

Discussion in 'Index Futures' started by youngtrader, Jan 24, 2008.

  1. Over the past week or so from what I can tell everybody running their black boxes has either blown up or pulled the plug on them for the time being. What im seeing is more pure bid/offers and a more structural market. What seems to be the interesting thing though is that volumes seem to be increasing when this happens and we also seem to be trading bigger ranges (I know I know a lot of that could be because of the financial market turmoil we have going on right now).

    So my questions are to the eurex and liffe exchanges. Why are you guys even allowing these black boxes to come into the markets? Everybody bitches and moans about them and finally when they ditch you like in august the locals take over and we have bigger ranges and actually more volume? It just doesn't make since why they would still allow these things to trade in the markets when obviously the markets can do better without them and make the locals happy.

    Just thinking out loud

  2. Euler


    I have heard the opposite regarding black boxes for equities -- they are flourishing in this environment, at least the ones I've heard about. Is it really that different on the Eurex / Liffe?

    In the long run, I can't imagine that banning black boxes will be beneficial to anyone or anything but pocketbooks of the locals.
  3. bespoke


    Why are you always so against BBs? What exactly does "the markets can do better without them" mean? What is a better market? A place YOU can make money easier?

    My BB loves this type of market :D
  4. Do you two fancy each other or something?

    Rather than hide in the closet why not come out?Maybe PM each other and meet up?Should be a nice night.

  5. Actually I can make money just fine in about any type of situation but im looking out for fellow traders.

    The main reason I am bringing this up is because the exchanges need to wake up and realize that these black boxes do nothing but hurt the markets and fuck the locals.

    Think about it guys, these machines ditch the exchanges when times get tough and leave all the market making to the locals who imo create a better market and volumes actually increase on the days the machines are gone not to mention the increases in trading ranges.

    These black boxes have a license to steal imo. It isn't exactly a fair market when the black boxes are around. Bids/Offers are a complete joke, they abuse the pro rata algorithm on contracts such as euribor.

    I can't wait until eurex and liffe literally squeeze the locals out and then they have to rely on the machines to make a market and keep volumes up. That will be a complete joke and I wouldn't be suprised if either eurex or liffe went under because of something like that happening in the future.

    Think about it if you take away the machines you make the locals happy, actually increase volume, increase trading ranges, expand trading opportunities for everyone and you would be able to actually say that we are an exchange that believes in putting everyone on a level playing field.

  6. rosy2


    what market are you looking at? trading volume has increased dramatically over the past few years because of automated trading ability.

    who are these "locals"? Do you just mean members of an exchange? Locals used to be the guys in the pit but they are irrelevant in todays market. My firm is a member of several exchanges and provides more liquidity from automated programs than any human could ever do.
  7. rosy2

    Bund, Bobl, Schatz are the markets I speak of. Actually if I remember right eurex's volume actually declined this past year (or quarter I cant remember lol). I honestly believe this is because of automated trading squeezing out the locals.

    Locals imo are any traders that are in a specific market day in/day out all day long. I know thats what they were called in the pits too but I still just call any trader that.

    When you speak of liquidity are you talking about actual transaction liquidity or bid/offer liquidity because that is a huge difference in my mind.

  8. BKuerbs


    According to the Eurex Monthly Statistics December 2007 the volume for Fixed Income Futures in total dropped 11% (YoY).

    Schatz: -14%
    Bobl: -4%
    Bund: -13%
    Buxl: +21%


    Bernd Kuerbs
  9. BKuerbs

    Thanks for the info. If I remember correctly your a veteran eurex trader yourself....right? Could you please shed some light on this discussion?

    Also I would love to hear some thoughts from THE BEAKER and Spreader.

  10. Grant



    Do you know what the comparable figures for US fixed-income futures are?

    I would guess the US numbers show a greater increase/smaller decraese reflecting a perceived dovish US rate stance against the hawkish EU rate hawk stance.

    Perhaps the more telling figures, for US and EU, would be those for Dec and Jan.

    #10     Jan 27, 2008