I'm an individual/private trader and trying to figure out how to trade CME Clearport products. The CFTC requires a networth of 10MM in order to enter the market as an individual which I don't meet. I'm trying to find a broker/s that would be okay with me posting a much reduced margin in order to trade clearport through them. So far my search has been fruitless. Does anyone have any advice or knowledge on a good broker or other avenue of getting into the Clearport game? Thanks!
Get on the Nymex website and find a broker that owns a seat - a direct clearing member. Having said that, and having traded ClearPort and ICE financially-cleared OTC products, you should be aware that the margin requirements are substantial - even on an intraday basis. Unless you are trading quite liquid products like the Natural Gas Options, you will most likely be holding positions overnight whether you want to or not. Even with the NG Options, you will be giving up substantial 'edge' to get out of the market in a timely fashion in order to flatten up for the day.
Thanks Bone.......after further research I've come to the same conclusion.....as a personal trader I just can't come close to Clearport's requirements. My next best bet is Nat Gas Calendar Spread Trading on the MERC. I've traded refined product spreads before, but never Nat Gas....I'm wondering if you have any advice on what specifically more often than not drives those spreads. If similar to RBOB and HO, i've found that a spread is essentially a flat price position with a hedge, but gas is probably diffrent. Thanks!
Griggs: There are members here who are certainly more knowledgeable about Nat Gas fundamentals than myself. I have in the past traded the ICE HHNG Swaps and the Clearport LN Options in combination with OTC Power Swaps and Options in order to construct Heat Rate positions. I currently trade the Nymex HHNG contracts for butterfly spreads and calendar spreads - I use on a daily basis and teach my clients technical models and statistical correlation studies to successfully trade those spreads.
Many OTC financially-cleared products are suffering from liquidity issues - many of the bank desks and hedge funds that participated in the markets several months ago are no longer around. There is so much latency with stale prints and settlements that important spread relationships like power heat rates have suffered from a correlation skew perspective. It can be very tough to get out during the day in terms of a day-traded round turn, and the settlement marks get downright nasty. The ICE and ClearPort product managers try to derive a fair settlement mark, but in the end, there is no substitute for liquidity. Run some correlation analyses for these products and you'll see what I mean.
Being able to do Ice OTC/clearport isn't as hard as it sounds. What products specifically are you interested in?
I'd like to trade the spread between Henry Hub Spot/Cash and the prompt month NYMEX futures contract. I think that product on Clearport is called the Henry Hub Swing Swap (SN). So far as I've been able to determine, without $10MM I can't play.