I'm going to guess that the liquidity gets split and you end up with two less liquid contracts. The other possibility is that one of these contracts just gets no volume at all -- like what happened over at Eurex...
I was thinking the same thing. Hard for me to imagine they "need" three separate contracts on the same index at the same exchange.
The arbitrage will prevent this from happening. Since both the mini-dow and the big dow are both 100% electronic, the arb programs will keep both these markets very tight. In fact, this new product will help tighten the spreads on the mini-dow. BTW, I predicted this move over two years ago on ET. I said both the Dow and the ES will introduce a larger product for institutional investors to draw in more liquidity. It freaking took awhile, but they finally did it.
True on all points Mav. I presume the CBOT has gotten wind that the CME is going to introduce the pit traded specs of SP to Globex during RTH.
Not sure I totally follow that as the Eurex contracts trade zilch for volume while the quotes are kept in line. But I'll take your word for it and wait and see.
what will happen to the floor locals who trade the $10 dow contract ? will they have more opp for arb or less ? will they be forced to switch to screen?
I'm curious what will happen there too. They really don't need 3 freaking contracts. LOL. Amazing, the DJ contract still does volume. Not much mind you, but traders do direct some flow there. No doubt the guys still left in that pit will be trying to arb all three contracts. Not a bad idea really.