Exchange Fees

Discussion in 'Trading' started by jaming5002, May 8, 2003.

  1. I've read alot of posts on ET about people complaining about exchange fees. But I've read very few that offer solid, defense of why not. So I wanted to pose a question to you all.

    Why shouldn't exchanges be allowed to charge fees?

    I'll begin by playing devils advocate. I think that exchanges are entitled to their fees. They are like any other business. They develop products, such as futures contracts, they market them with advertising, and they sell them to people who wish to trade them. They have staff and salaries to pay, like any other business. So why shouldn't they be allowed to charge fees.

    Can't wait to see some of the responses!
  2. I think most people's complaint about exchange fees are their levels relative to other exchange. For instance, Eurex fees are much less than the US.
  3. Maverick74


    Don't hold your breath jamming, these people all want something for nothing. When people can't make money trading they will blame everyone but themselves. The exchange fees, their trading software, their prop firm, they only have 3 flat screens instead of 6, whatever. They are just excuses. The day they can look in the mirror and blame themselves for their losses will be the day they start cleaning up in the market and stop worrying about the miniscule amount that exchanges charge to clear your trades.

    You know what's funny, 10 years ago, guys use to pay 10 times the commisions and exchange fees they pay today and use to trade over the phone instead of computer and they still made ungodly amounts of money.
  4. bump
  5. Tea


    I'm with you guys.....

    I think we should all pay more exchange fees....

    so that Dick Grasso can make even more money
  6. Toonces


    My complaint is having to pay the same exchange fees repeatedly. If you're a pro and have additional software, a backup broker, or whatever, you have to pay Nasdaq more than once, NYSE more than once...
  7. tmb


    I agree with you wholeheartedly. There should be a way that we could prove or certify to one vendor that we have already paid the same exchange fees through another vendor.
  8. Jaming,

    The complaints are measured against the CBOT and the CME because they are:

    1. Their fees are so much higher than Eurex and LIFFE. 300-400% higher. Both exchanges are generating record revenue and volumes without any relief to their true customers.

    2. Both US exchnages have different structures for Open Outcry and Electronic. As the Bond and Note pits began to lose the battle on the CBOT, they tried to stem the tide by raising the Electronic fees for customers from $.80 per contract to $1.30 per contract. The tide was temporarily stemmed but it is completely apparent that the Treasury futures pits are doomed. Options are another story.

    3. The CME charges $1.14 per contract to Customers and much less for Members. It is OK to reward members for their investment, but the difference is exhorbitant. Eurex and LIFFE charge a uniform amount to thier customers so the field is level. Market Makers may get a break on Options, but that is it.

    I hope that the reasons for discontent are pretty clear here. The Institutions are even more angry with the CBOT and CME than posters on this thread. It is justified, but the US exchnages have a Monopoly in a way. Eurex is going to try and bust up that Monopoly by listing all of the US product in 2004 and this will pressure the US exchanges to lower their rates.

    Risk Less

  9. Thanks for the response. My point is that traders know of these fees in advance. The fees are what they are.

    My responses

    1) I think most people forget that trading is a professional's game. The larger you are, whether as a independent trader or working for a bank, the greater advantage you have. For people to complain that emini exchange fees are too high is complete crap. I don't think anyone likes fees. But this is the fairest time in history for the small trader. Not completely fair, I'll agree. But fairer than any other time yet. Small traders have access to nearly the same techonology, they don't have to rely on trading over the phone or even pit fills. So all small traders, stop complaining, and move on.

    2-3) You said it riskless, the customers. This is still a business, not a charity. Just as the owners of any business get breaks and deals, so do the shareholder/seatholders of an exchange. Seatholders have at least 300-400% more invested in the exchange, so they get the breaks. It's way the world works. People should deal with it.

    Most of the complaints on the seatholders lower fees sound more like hidden envy and jealousy, than logical complaints.

    the devils advocate

  10. Sounds like a fair complaint.

    #10     May 10, 2003