For EurexUS to work it will need a long-term "Edge", such as some product margin offsets versus Bunds etc. Also EurexUS may be able to do a better job with the Options market, with lower block limits, and a more broker/client driven market.
What´s the functionality of ECBOT ? - no native stops - no RFQ for futures options (at least with IB´s implemantation)
We should all support Eurex USA. Look how much eCBOT rates have come down since they came to town. The eCBOT had no intention of ever dropping their rates and they will turn around and jack them back up if Eurex US is a failure. Remember, they have a new trading floor they have to support. Competition is good. We need Eurex US to succeed. We need Liffe-Connect to succeed in their attempt to take away eurodollar market share from the Merc/Globex. I'll say it again, competition is good for all of us. Imagine trading QQQs only on the AMEX. Eurex US should be viewed as the INET/ARCA/REDI of the futures world. Support your local (foreign) exchanges. If you have treasury futures to buy or sell, send the order to Eurex USA. "Those who support the floor are destined to die on the floor" -JoHa
Tend to agree with the sentiment of the above. (Inspite of the fact that EUREX / CBOT 10yrs are not fungible, thus making a changeover for instituitional positions tricky at rollover time.)
first of all, as someone who is able to watch both markets on a daily basis i would have to say that eurex US will not last. the main thing that will cause their demise is that they are not nearly as LIQUID as the CBOT treasuries. for instance, in the eurex US 10yr there is typically only about 250 cards on both sides, while the CBOT 10yr is nearly four times as LIQUID with at least 1200 cards on both sides, most of the time even more than that. so if you are an institutional trader that wants to sell 1000 ten years you will probably get them all at one price on eCBOT (sometimes you can even sell 3000 and get them all at one price). thus, that trader will save much more in terms of overall liquidity when exchange fees are minimal relative to slippage that the same institutional trader would pay for on eurex US. JOHA, as someone who is on the floor everyday it is hard not to notice that EVERY single big bank still has desks on the floor and still use the pits to execute some big futures orders (i couldn't help but notice GOLDMAN buying 5000 ten years this morning when they easily could have done it on the screen). i have also noticed that the liquidity on eCBOT is most likely provided by a lot of the traders standing in the pit arbing the two markets. why don't you just go back to europe and support the exchanges there. i guess no one has confidence in the CBOT since their full memberships are trading at ALL-TIME highs and have risen from 300,000 to 950,000 since eurex has tried to take over the treasuries from the CBOT. mcurto
The old guard is VERY conservative, that explains why they still perfer the pit cars Like that guy of 55-years old I know that is scalping the S&P futures off-floor... I told him that with the eletronic cars you have split second fills at the prices you want. He doesn't trust technology, he told me....I started to
*************** "JOHA, as someone who is on the floor everyday it is hard not to notice that EVERY single big bank still has desks on the floor and still use the pits to execute some big futures orders (i couldn't help but notice GOLDMAN buying 5000 ten years this morning when they easily could have done it on the screen). i have also noticed that the liquidity on eCBOT is most likely provided by a lot of the traders standing in the pit arbing the two markets. why don't you just go back to europe and support the exchanges there. i guess no one has confidence in the CBOT since their full memberships are trading at ALL-TIME highs and have risen from 300,000 to 950,000 since eurex has tried to take over the treasuries from the CBOT." ****************** Hmmm. Testy, testy, testy. A few comments: 1. Floor trader. I should have known. Tell me, do you like watching Betamax movies on your B&W TV or do you prefer the soothing sounds of your 8-track player? 2. You say the liquidity on the screen is probably the result of floor traders arbing the two markets. If(when) the floors go away, do you envision the liquidity on the eCBOT going away? 3. Nice comment trying to send me to Europe. Did I offend you? Actually, the CBOT licenses the Liffe-Connect platform. Liffe-Connect was developed by Liffe after their floor shut down. That happened right after Eurex offered Bund futures on their electronic platform. Prior to that, the Bund traded on the Liffe floor. Most of Europe realized quickly that screens are far superior to pits. Those Europeans are always ahead of us....electronic trading, cuisine, fashion. Anyway, the irony of your statement is that the eCBOT pays a fee to Liffe-Connect to use their technology, so you my friend are actually supporting the European exchanges that you appear to despise so much. 4. Look, my point was that we should all want the competition. Its a good world if both exchanges share the treasury volume. Its a great world if they both share a fungible treasury future (never gonna happen). Competition is good. I like my Big Mac's but every now and then I like a good ole Whopper. Don't be so narrow minded. Does anyone else have a thought on this? Support Eurex US AND support eCBOT. You want them BOTH to be successful.
The liquidity will definitely remain on eCBOT once the floor goes away because there are many former floor traders now trading upstairs that provide plenty of liquidity (not sure if you've heard of Ray Cahnman, Chip Kenyon, Baldwin, and the like). They are all providing liquidity to different markets in a new environment. I guess us Americans aren't as quick as you Europeans when it comes to picking up new technology and learning new things. Come to think of it, I guess Europe is just about perfect when it comes to providing transparent and liquid markets (markets that show size and are free of manipulation). Oh wait, I forgot about the fact that the Eurex options market claims that it is transparent but is actually a "call-around" market wherein brokers call each other and then enter their "planned" trade into the Eurex system. This ridiculous market structure has been discredited by one of the biggest market makers in interest rate options in the world, DRW Trading, run by a pretty smart guy that graduated from a little school known as the University of Chicago. Yeah, but I guess us bond traders in Chicago are just pretty stupid people that enjoy watching black and white television. Good luck in your trading ventures and we'll know by the end of the year whether or not Eurex US will last. And I ask you another question, where do you think the liquidity at Eurex US results from? Not the banks, but the upstairs traders arbing eCBOT and Eurex US. Believe me, the floor is a pretty dismal place at times for certain guys, some can barely afford to pay their clerks and make a living. Don't worry though, they haven't even begun to move the options to the screen and I doubt that will happen at a breakneck pace. Until then, good luck in your trading.