http://www.cme.com/electronic_trading/trading_access/etrading_solutions_providedsolutions.cfm CME provides GLOBEX Trader to connect with Globex directly for $400/month, which sounds like huge savings compared to trading through a broker. I'd like to hear from those who have been using this service. 1. Do you have to be a CME member to use it? 2. How much does a clearing firm normally charge for clearing service only? Thanks in advance.
No That will vary according to what you can negotiate. Bear in mind that the CME charges commissions and fees for non-members that are much higher than they charge members. So before your clearing firm makes a cent, you'll have to pay $2.30-ish/RT just for the CME's nut and the NFA's fees.
You will still need to clear your trades with a member broker. There is no free lunch here. The fees mentioned on the website are only the CME's clearinghouse fees. The broker will add his fee to each trade cleared. The electronic local route is only for those who do very high volume and lease a seat otherwise a direct connect retail broker gives you the same access. The main attraction of being a member trader is that GLOBEX clearinghouse fees are capped at $50 a day. <i> "If you choose the CME-provided front-end trading solution, you will need to complete a series of steps, which vary according to the option you select. Your GLOBEX Services representative will work with you to help you decide and submit your requests for the following: GLOBEX Trader software and hardware options Network connectivity options <b> Clearing Member guarantees and agreements"</b></I>
'Similar' but certainly not the same. VPN access directly to the CME means that you have taken one 'unknown' out of the equation - namely your broker's system. Globex can be up and running but if your broker has a problem with his software, hardware or connection to the CME, you will suffer. You are also at your broker's mercy as to whether your Limit and Stop orders are released immediately to GLOBEX or whether they choose to release the order only when the price is reached. Most traders aren't even aware how their brokerage submits orders to Globex. You are also at the mercy of the Certified Software Vendor as to when they perform their daily maintenance. I believe some (Patsystems' J-Trader?) is not available for the night session until 5:30 pm EST or is it 6:30 pm? Finally, I don't believe that high volume is necessary to make a Globex VPN cost effective. Most retail traders are paying upwards of $5.90/RT all inclusive. If you can get an FCM to clear your trades for $3.30/RT (or less) all inclusive, then you only need to make approx. seven RTs a day trading one car or one trade a day trading seven cars to make it worthwhile. That's hardly high volume - and anything above that makes it even more cost effective. Then there is the difference in delay of quotes during fast markets because of how the CME channels data down different pipes depending upon the vendor etc. - but don't get me started. The point is that the access is anything but the same.
So you've replaced the CME's system with the broker's. Same diff. The orders have to get validated and go thru risk management just the same. What the CME is offering is no more direct than anything else out there. It meant something in the past when internet trading often meant email brokers or slow web interfaces, but now its all the same.
No - not a replacement. The broker's system is in addition to the CME's. I've eliminated one link in the chain. Yes they still have to get validated but they don't have to make the journey to my broker's computer first. A VPN direct to the Merc is significantly more direct than hopping through multiple internet servers to a broker's server, then hopping to the CME, hopping back to the broker and then through multiple internet servers again back to me. Not even close.
A direct line to the Merc is not included in the $400 fee. Also there is nothing preventing you from having a direct line to your own broker. I don't know what you'd do with the extra 70 milliseconds, considering how deep the book for the emini is. Architecturally, what the CME offeres as a retail trading platform and what direct access brokers offer is the same thing. There is no such thing as super direct access for the CMEs product and crappy access for everyone else. They all access the same set of APIs, they all validate customer orders and go through risk management the same way. The CMEs platform does NOT cut out an extra hop, it does exactly what direct access brokers do, or what those boutique trading platforms do.
Who said anything about a direct line? I said it was a VPN direct to the CME. With the data packets as small as they are, there is very little difference in transmission time between a VPN and dedicated T1 to the CME. I trade from different locations and use both. LOL - Nothing except your broker. Try asking, IB, Refco or whoever to allow you to establish a dedicated T1 or ISDN to their server - you may be surprised by their answer. Even if they allowed it, it still involves extra hops and a journey through an extra system. Saying it ain't so won't make the extra hops or the extra system go away. It's true that there are times when there is little or no difference but I presume you've tested this by looking at Pats, TT, Future Dynamics alongside a Globex VPN - each on a T1 line, an ISDN, a dial- up and a VPN to be able to make such 'knowledgeable' statements as '70 milliseconds' - cos we tested them extensively and I've got news for you - it's nowhere near a 70 millisecond difference. If you're a position trader or a 2/3 trades a day daytrader, then this is moot, you are unlikely to be affected and there is little to gained or lost from the platform you are using. But to say that there is no difference is clearly an uninformed statement. Your conclusions are only assumptions which you believe to be fact. However, as you've never tested these different platforms side by side, how would you know whether or not there is any difference? Trust me - before I give the CME $1,000 a month for our direct line or $400/month for VPN access, I made damn sure that 1. There was a difference. 2. That the difference is enough to have an impact on the way we trade. How can they be the same when every other platform requires the additional step of being processed by an additional system BEFORE it gets to Globex? You don't get something for nothing - especially in I.T. It ain't just the extra length of path that makes the difference, it's the extra I/Os.[/B][/QUOTE] Had you attended meetings between some screaming CSVs and the CME regarding the different data distributions they employ for different vendors, as I have, you might not feel so sure about that. The orders that go via a broker's system is validated TWICE, they go through risk management TWICE and that involves additional I/O geting in and out of your broker's system - and don't forget the return journey. As for APIs ????? They have nothing to do with it. They're just an interface, a mechanism to allow the data to be referenced within the system. They have nothing to do with how the CME distributes the data. To say it is no more direct than going through a broker's machine first, is like saying that a direct flight from NY to Chicago is no more direct and no faster than going via Atlanta.
The fact the CME uses a VPN simply describes the security employed in transmitting the packets and doesn't describe how they are transmitted. VPN does not imply that packets get there any faster. You can do VPN over the public internet and the speed will actually be slightly slower than unencrypted packets. If you want to reduce latency you need to establish a direct line and get off the public internet. Establishing such a circuit is an extra charge from your telco. (In any case the difference in latency would not be noticed by a human trader. ) Some of the brokers you mentioned do offer a direct line. The retail platform offered by the CME is not GLOBEX itself, it is an additional platform like TT, Fastfill or TWS. Its got a client and a server to communicate with the client and it opens an access to the GLOBEX API, and runs the orders past risk management. It doesn't cut out broker platforms, it IS a broker platform.
You're just making assumptions again. As I said before, you clearly haven't tested these different platforms side by side so you really don't know whether there is any difference or delay do you? It's none of the above - it's GL/Trade. Yes, it is a front end platform that obviously performs in much the same way as any of the others - when did I say otherwise ???? But the order does not have to route via a broker's system for vaildation which has a client and a server IN ADDITION to the CME's validation. In any case, The front end is irrelevant, it is the fact that the order sent via a broker's system involves extra processing and a journey to an extra location involving an extra server that causes a delay. If you believe that this extra processing and longer path couldn't possibly have an effect in time delay then I really have no interest in wasting my time trying to convince you.