Joha, I did not know anything about "linking liquidity pools". I am going to ask around about that one. Thanks for sharing the info.
TGM, I couldn't agree with you more on how things "should be." In my opinion, all markets should be FIFO (first in, first out). There should be no specialist. Pretty much the old Island, now INET, model. I'm not a bond expert but the primary dealers still call the shots. The reason BTEC wants to link the two pools is they don't see the FIFO model taking off because the primary dealers won't support it. If their attempt fails, then the whole eSpeed thinking world will say "I told you so." I tip my hat to the BTEC guys for thinking of this and for trying to bring a power house like TT into the mix to help launch this new style bond market. TT never released the BTEC futures products (when BTEC was a futures exchange) and BTEC claims that was one of the reasons they failed. Eurex US learned from that and struck a deal with TT with the launch of Eurex US. But I digress, this is a BTEC thread. Call Gerald Lawlor (NY) or Tom Scanlan (Chicago) at BTEC. They can fill you in on the details of the FIFO exchange and their ideas on how (if) they will link the two market models.
FYI---just released-----JoHa ----think E-Speed is "feeling a little heat"..... http://news.yahoo.com/news?tmpl=story&u=/ft/20040813/bs_ft/068d0f96ed6311d8a58700000e2511c8
If you guys wouldn't mind. I've been trading risk arb in the equities for about five years now. I was looking to trade the cash/futures spread with espeed but don't understand some of the problems you guys were encountering with the cash side in earlier posts on this thread. Sounds like the cash guys were either holding and/or breaking trades as they wished, but that TT was at least providing a better platform to deal with the problems. If you could, I would really appreciate any further info you could provide about the cash side that may affect whether or not I try the spread. Thanks in advance for the info.
Fatfozzy, I would say that espeed was great. However, their rules (in my opinion) have not kept up to speed. When all the arbing was done from the espeed and the phone tied to the pit in the CBOT it was great (just 3 years ago--you could still do this). However, now the futures are all electronic and the cash rules based on the past and past technology are antiquated. The reason Brokertec exists is because Espeed would not change. They just try to get political. In some ways it parallels what is going on with the specialist in the stock market. You know the rules are antiquated and changes must be made but no wants to change and of course everyone becomes a politician. Our cash market was in place before our futures market. Our futures market then helped our cash market grow TREMENDOUSLY in the 80's (with the help of govt. spending). Of course you may not know that talking with old dealers. The new model is based on Eurex. The gov't. bond market in Europe is the direct opposite. Everything evolved around the BUND (some may argue with me about this) futures and then growing the cash. Cash Dealers here have owned the show and cannot stand the thought of rethinking things because of futures. FIFO and electronic trading platforms is one of the reasons US fixed income markets are growing. They need to rethink things on the cash side. TT has a solution with Brokertec that could be a knockout blow. Many new desk dealers like it (behind the scenes). However, you are dealing with some dealers that do not want to budge and give up what they think are eternal rights to certain protocols (that can be a big edge). There are legitimate questions regarding diff. liquidity pools. However, lets be real, they can solve that. It should get interesting. They will have to change. Of course, this is just my opinion, anyone else feel free to chime in. All the younger (under45) cash traders tend to agree. It is SOOOO much easier following the futures protocol.
They're now offering futures on ESPD, it will be interesting to see how they react the ICAP/BTEC's TT deal.. Maybe a partnership with Patsystems??? In any event, you can find me in the liquidity end of the pool, getting my arse kicked
My friend wants to invest e.g. $1mio buying 6% Eurobund real security not a futures. Anybody know how and when he can do it?? What is commission for this transaction, procedure of phisical delivery and so on? Please answer asap
ChiBondKing!!--good name,\ I used to trade in the Cbot and loved those fish sandwiches!!!! Anyhow, yeah I forgot to mention you can trade Cbot debt on Espeed. Generally, this has lead to cash guys trading the futures into the number or whenever they need to get in fast!!! They should just let the cash trade this way as well!!! It tells you something, when the cash guys are hitting the futures on an Espeed terminal and NOT the cash!! Better trading protocals??????!!?!? Either way, what it means is that the cash guys now have access to perceived faster trading. The cash side ends up hurting themselves. Fine by me. They will learn one way or another.
fatfozzy, A few specifics on how the eSpeed and BTEC bond trading rules are f#cked up: 1. Work Up: If you are alone on the 6 offer and I buy the 6's from you, the trade enters a work up period. BAsically, for the next "x" seconds (with x constantly changing on their whim); you and I have exclusive rights to trade 6's again. If someone else tries to buy or sell 6's while we are in work up, they get a 'come back later' message. There is more to this rule but this gives you a good idea of work up. It goes back to the days of phone trading where the brokers rewarded the person who just traded by giving them first shot at more. 2. Cancels: If you go 6 bid and become the best bid, you can't cancel your order for x seconds. Again, x is always changing and it can even vary across instruments (2,5,10, 30). 3. Trading Thru The Stack: This one has changed so often that I no longer know what the rule is, and it varies across maturities a well. If the market is 102 bid, you can not offer or sell (I'll explain that one next) below 102 to take out the book. 4. Bid/Buy/Offer/Sell: There are 4 order types: Buy, Bid, Offer, Sell. If you are 106 bid, I can go 106 offer and the market will not trade. It will be locked. If the best offer is 107 and I enter a BUY order to BUY 105, I will get rejected because there isn't a 105 offer. Bid/offer are passive; buy/sell are active. eSpeed has recently changed this and allows bids to be active which begs the question, why not make all orders just buys or sells. Wait this just in, eSpeed changed the rules again so now I have no idea how it works. The rules briefly described above are all applicable to eSpeed and BTEC with the exception of #3 which may only apply to eSpeed. Oh wait, eSpeed just changed the rules again in the 5-year room!! I agree with TGM. This model sucks. Hopefully BTEC will go ahead with their 'futures style' (FIFO) model and hopefully it will kick the crap out of the old model. I hope this info helps. protuberance, eSpeed has access to the Euro Gov't Bonds (EGB). Not sure of delivery procedures for those. Good luck and good trading. This just in, eSpeed changed the rules again in the 10-year room!
thanks so much for all the replies, I think I've finally got a handle on it. I understand the frustrations, good luck to you all in the markets, whatever you trade.