Hello everyone. I understand these are newbie questions, but I'm trying to understand two things: 1) What does CME Direct actually do? Does it allow people who manage to get it to trade directly in the exchange without having to go through a broker? 2) If not, how is it theoretically possible? Is leasing a seat enough or you have to buy one? Future brokers fees are massive and easily double the whole fee relative to considering only the exchange fees, I understand the average joe will not be able to get access without a broker but I'm curious to know what are the required steps. Thank you in advance.
CME Direct is simply a trading platform for futures and options on futures that the CME developed. You still need an FCM to enable Risk and to clear your trades. I used it prior to 2018 and like it very much. I’m finding it hard to find an FCM that will enable the software. Although very good for execution, it’s very bad at risk management, position management and margin.
To save costs, you need to lease a seat or buy one. Depending on the specific markets you trade and volume I ca give you an opinion if leasing a seat will save money after the monthly lease and other initial costs with CME. What my colleague @Robert Morse shared above about platform and risk is a perfect description. https://www.cannontrading.com/services/cme-membership-prices
Thank you very much for the answer. That's what I thought, but is there a way to trade directly in the exchange without a broker? You say I need an FCM, are they less expensive than normal brokers? Did you use it with a normal broker? Thank you very much for the answer. For now I'm still in the backtesting stages, I find the commissions pretty much an insormountable odd, that's why I'm eager to know if there is a way to avoid a broker, that would easily cut the commissions in half.
no. You need an FCM/broker to be able to send orders to the CME. Also the bulk of the fees are the CME exchange fees and this is where the lease will help. happy to help with backtesting figures, let me know the markets you testing etc. Feel free to PM me.
Well, I'd say even broker commissions are to be considered. But you're right, lowering CME fees is a good starting point. Do you know of any broker/FCM which has lower commissions than Interactive brokers? I will text you in the future if I will decide to make that step, for now it's too early. Thank you.