Thanks, Joe D, your comments certainly make sense. But the real difference to me is cost savings, not speed. I have to question the honesty of retail brokers, none of them has mentioned you'd better get a direct Globex connection if you make more than 10 r/t's a day.
Banjo, Yes - Stops are held within Globex on their own separate server. So, once transmitted, they will be there. CoolTrader, The cost savings come as a result of clearing directly through an FCM. This is the case regardless of whether you use the CMEâs direct access or not. But my FCM has very little overhead with my account. He established Clearing records at the Merc for my accounts and is able to modify them as and when he desires. Beyond that, he produces daily/monthly statements for my accounts and that's about it. His box doesn't handle any of my trade traffic as it all goes directly to the CME. He also doesnât have to handle any problems as The CME has GCC, a manned 24 hour desk to take my calls. The only time I trouble my FCM is on the very rare occasion that Globex goes down while I have open positions. Then I have to call to their floor desk and offset my emini trades with the full S&P. I should add that my FCM also offers TT and, more recently GL/Trade. I could get these front ends from him. The cost is about the same and my commissions would be identical. But Iâd be routing my orders through his box first â I see no point in doing that. Whereâs the advantage? You are correct, the speed will be unimportant for most. The reduced commissions are more significant but for me, the most important thing is the elimination of the increased exposure to software/hardware/connectivity failure that is present when routing through a broker. We all face this but routing through a broker means you are exposed to someone elseâs problems in addition to your own. Again, I see no point in assuming the additional risk. I may have misunderstood your last statement about getting a direct Globex connection if you make > 10R/Ts a day â but there are no limit requirements to get direct access to Globex from the CME.
From the CMEs website:<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> Did you notice item #3? Having a clearing relationship with a member firm means they are running your order past their own risk management. The clearing member is responsible if you blow up your account and you end up owing money. Do you think a clearing member is going to risk a Nick Leeson let you send in orders without checking them out first? There is no such thing as super direct access and what the CME offers is just another competing direct access platform. It does not skip a hop. Also I've seen server logs from two of the direct access retail brokers and the turnaround for the broker servers is on the order of 15 milliseconds. I don't know how much faster the CME's product can be, but even it must have a turnaround time somewhere above zero and hopefully below 15 milliseconds. The broker platforms are all already very fast and many are themselves clearing members. The broker server is hardly the thing to worry about if you want to speed up trading.
Your traffic goes to a server handling the CME direct access trading clients which in turn addresses the API to GLOBEX just like TT or FastFill or TWS.
Did you know that item #3 involves risk management control that is in the form of a clearing record that is held at the CME - NOT on my broker's machine? Your order routed via a broker goes through the same path - validates against the same Clearing record process at the CME - but it also has to go through his own validation on his box first. By the time your order gets to your broker's machine, my order is already at the CME - but that couldn't possibly be any faster - could it? And we have seen differences in the quotes, often measured in minutes, between them ....and what about your testing of these times? When and over how many weeks were the logs? What times of the day? What volumes were trading at the time the logs were recorded? Which do you think is more likely?- That they showed you the best response times or the worst? Wake up!!
.... and your order goes through the same server, the same process but after it's been to your broker's machine - wherever that may be.
Ugh! The CME IS doing exactly what your broker would do if you used one of the products that the broker hosts. Nothing is being saved. No hops are being skipped.
Lets give you 5 millisecond for faster turnaround and 15 millisecond for the retail broker's latency. In a market as deep the the emini that 20 milliseconds is giving you what exactly?