Exchange seats - worth buying?

Discussion in 'Professional Trading' started by Ghost of Cutten, Jun 3, 2010.

  1. TraDaToR

    TraDaToR

    Thanks guys,

    I am not american, nor residing in the US so tax rules must be different for me anyway...

    I will check historical prices this WE.
     
    #21     May 3, 2013
  2. garachen

    garachen

    Just throwing it out there:

    Full seat is for Ags

    AM seat for Treasuries

    So, unless you are doing Ags don't buy the full seat. In addition, once you own the seat the CME becomes very interested in you being pretty much a single mostly manual trader. Most automation is going to result in questions unless you do the corp route which has other problems.
     
    #22     May 3, 2013
  3. I am only speak from my own experience but the CME has never brought this up with me. At the very worst they may inquire about it but if you are doing nothing wrong there should be nothing to worry about.
     
    #23     May 3, 2013
  4. TraDaToR

    TraDaToR

    Thanks for the advice. I trade ags, no treasuries, 90 % manual.
     
    #24     May 3, 2013
  5. garachen

    garachen

    There seem to be certain triggers that will get them looking into you. The rules state than ATS's are not 'automatically allowed' under an individual membership but 'automated spreading' is. And I think the line is left purposefully grey.

    I used to trade A LOT of ags by myself, manually with an 'autospreader'. They forced me into a corp membership.
     
    #25     May 3, 2013
  6. Could you post the rule that states that. I am not questioning what you are saying but am interested in looking into this further.
     
    #26     May 3, 2013
  7. garachen

    garachen

    Sure. It's not a single rule, but an amalgam of rules. It's all based on Tag50 regulation. The gist is that CME has taken the stance that a 'single individual does not have the capacity to both design and operate an ATS'. (That's stated explicity somewhere I can't find quickly.) So, if you mark your Tag50 as Automated as an individual member there is some burden of proof involved on your part.

    Generally, if you are using 3rd party software with minor ATS ability where you don't even have the capacity to set the Tag50 you might technically still be in a grey area but unless you are doing 20K+ contracts a day I doubt you'd hear from them.

    If you start with this link you can probably find the other stuff.

    http://www.cmegroup.com/globex/files/tag50rule576.pdf
     
    #28     May 3, 2013
  8. 4.2.2. Member Developed/Operated ATS
    Individual members may develop their own ATS hardware and software. Wherein CME Group
    determines in its sole discretion that the ATS is solely developed by individual members and is
    solely operated and supported by individual members, the trading activity executed through the
    ATS for an individual member account may be eligible for member fees.
    The burden of proof will be on the individual member utilizing an ATS to provide clear evidence
    to CME Group’s satisfaction that the member developed ATS is solely operated and supported
    by the individual member in order to receive member rates based on individual membership
    status. As such, the individual member must:
    • Make all trading decisions and be solely responsible for determining all trading strategies,
    parameters, inputs, and alerts; and
    • Be solely responsible for operating and administrating the system and for monitoring trading
    performance, system performance and alerts.


    4.2.3 Third Party ATS
    Individual members may wish to utilize third party developed ATS hardware and software in
    their trading activities. In limited circumstances wherein such third party ATS is solely operated
    and supported by the individual member once acquired,14 such trading activity may be eligible
    for member fees.
    For an ATS to be considered a “third party ATS”:
    • The individual member cannot have any affiliation including ownership interest with the third
    party provider; and
    • The third party developer may not receive any compensation (including any set percentage
    or discretionary bonus) based on the performance of the ATS.15
    The burden of proof will be on the individual member utilizing an ATS to provide clear evidence
    to CME Group’s satisfaction that the third party ATS is solely operated and supported by the
    individual member in order to receive member rates based on individual membership status. As
    such, the individual member must:
    • Make all trading decisions and be solely responsible for determining all trading strategies,
    parameters, inputs, and alerts; and
    14 For clarity, third party developers may provide data center administration, hardware, and software
    updates.
    15 To clarify, third party developers may be compensated per a set amount on a monthly, quarterly, yearly
    or other time period basis and/or on a set amount per trade.


    I fall under the latter.
     
    #29     May 3, 2013
  9. garachen

    garachen



    Yeah, I did too. Notice the qualifying language that you 'may be eligible' for member fees. They leave the door open. It's not very nice of them. But I don't think they are looking to be aggressive with that. Just leads to inquiries. What I found crazy though is that the logical progression of taking the next step and writing to them directly (which is actually pretty easy) they somehow consider a superhuman feat of joint effort and everything gets scrutinized.
     
    #30     May 3, 2013