PC, the term Market Maker on the futures exchanges is something you can apply for - and you're committing yourself to have two-sided orders in an instrument for x% of the time. You get discounts etc but not the knowledge of stop orders. You did not post anything that proves that, and it's simply not true - I think you are confused. LIFFE, Eurex, CME, ICE they all have Market Maker schemes - and this is not to be confused with the market makers of stocks.
The eurodollars futures have this MM or at least they used to. Lets say you are working to sell 50 on the offer and u are the only offer. If a MM joins you with 950 and then 100 trade on the offer you might only get 5 and the MM who joined would get 95. This just an example but basically how it works I think. It is not this way in the ES however. The ES is strictly FIFO. I dont know what it takes to apply for MM status. Im not even 100% sure the ED are still using this format.
A few corrections and updates: CME employs 10 different matching algorithms depending on market. Algorithm FIX tag 1142-MatchAlgorithm ========================= First In, First Out (FIFO) F Split FIFO/Pro-Rata K Pro-Rata C NYMEX FIFO with Lead Market Maker (LMM) N Allocation A FIFO with LMM T Threshold Pro-Rata O FIFO with TOP and LMM S Threshold Pro-Rata with LMM Q Eurodollar Options Y http://www.cmegroup.com/globex/introduction/ explains each matching algo in detail. http://www.cmegroup.com/globex/files/PriceBanding.pdf is CME's published table showing which of the matching algos are used by each instrument. Jim, you were correct: ES Futures, Options and spreads are listed as straight FIFO ... No Market Maker advantage. In fact, All of the e-mini's and currency futures are straight FIFO.
I was trading at the CME last week and we had L2 with 10 quotes on each side. The most retail quotes I have seen are 5 on each side. However, it does not really matter how many you see, because these quotes on the L2 can be pulled or added however they want.
http://www.cmegroup.com/globex/files/multipledepthbookFF.pdf MDP Fix/Fast increased to 10 deep order book. Visibility depends on your trading platform.
This thread reminds me of the Obama birth certificate conspiracy promoters: a whole lot of excitement and commotion about something with very little if any real consequence or import. If you actually take the time to read the CME materials, and if you truly have the knowledge to understand what it really means... there is no dark or secretive advantage for designated MMs in any market with any sort of meaningful volume. All high volume futures markets, like S&P 500 emini futures, Eurodollar futures, WTI oil futures, CBOT Treasury futures, HH Nat Gas futures, are FIFO (first in, first out). The MM program applies for designated firms in some very illiquid markets, like Crack spread futures and some Eurodollar options. If you think there is an advantage to getting order matching priority for crack spreads, then be my guest. Much ado about nothing.
Market Makers don't need access to stop levels of retail players. Imagine if you traded against both Buyers and Sellers, and that 98% of all transactions were between yourself (dominant Market Maker) and a smaller player. You would know by actual trading activity exactly what the retail sentiment was, and whether there was buying or selling pressure at any given price level, because you take the opposite side (as MM) of nearly all trades in the market. That's my view anyway, and there's no need for a conspiracy theory. The Market Maker "knows" or can infer by trade activity where these critical levels (stop areas) are, and exploits them every minute of every trading day in day trading. So, no need for conspiracy, at least in futures day trading on electronic exchanges like Globex, etc.
Scalpers and market makers have no idea what 'retail sentiment' is, and God knows they are not trying to exploit retail traders. A myriad of one lot orders from 'retail' speculators is of no concern to them - but a 500 lot eating into a 720 lot offer certainly get's their attention. They are flipping order flow by selling at the offer and buying at the bid. That's their edge. That's it. They are mindful of economic release times, related market activities, and longer term trends and support/resistance levels. Some guys have 'Market Delta' to help them track the order flow footprints, but that is the extent of 'sophistication' for them. Retail orders have no bearing on 'Market Delta' either.