For a long time the Tandem systems were the only platforms that had these capabilities and were the solution of choice for banks, exchanges etc. .... Today there are other choices from competing vendors but Tandems integration into Compaq and now the merged HP organization is a big plus IMHO for those shops that need this type of solution. HP is still the place to go for these solutions ..... On another note.... I am always surprised that the CME still has the type of systems failures that promoted this thread..... Years a go it was all too common for the floor to go dead due to a systems failure and yes, it is a shame that the news of these types of problems dont leave the floor as quickly as they should: it was always true that the floor knew about them well ahead of any dissemination outside the exchange ....However I'm not planning on going back to floor trading anytime soon ....
What I do for my traders as a remedy for this is set them up with an online excecution platform that will allow them to offsett there positions in the actual pit. Yes the customer will have to trade in multiples of 5 for this to work correctly but I only have a couple traders doing ones and twos so this isn't and issue for most of my clients.
Old trader I respect your post but I have to agree with the lousy trader statement. It sounds like you want something that nobody can have. All of the facts you mentioned here is old news to most on this board therfore you should be factoring all of this knowledge into your trading model. Lets face it, if the CME is not liable for these types of outages shouldn't you have a back up plan? Offsett with a big contract and trade 5 or 10 lots. Last but not least Compassion is for suckers, ladies, and kids. In the buisness world you will not find any. It is allways buisness when money is on the line, and I didn't just come up with this theory. You should know this. Like I said I respect your post and my point is that you need to create a back up plan becouse the odds on this happeneing again are pretty good. Peace, Comp
Old Trader makes some good points. the action off the low that day was totally bogus. This was a screw job, plain and simple. I'm not saying the initial outage was, but the follow through had all the elements of the old boys club at the Merc taking advantage of things. I would like to know why globex was shut down at all , since the outage apparently was not universal. And if it became necessary to shut globex, even though many if not perhaps most traders could still use it, why didn't they shut the pit too? The "explanation" of this fiasco has all the elements of PR bullshit. 100% buzzwords and bs, no real information. Can we be totally sure that Eurex has not infiltrated the CME and is sabotaging them internally? LOL. I think the SEC and the CFTC should have been on this that very day. Seize every e-mail and voice mail, check the phone records, immediately take depositions from everyone involved and get to the bottom of it before the official line is formulated. At the very least, there should be a rule for determining when globex will be shut. Now there is way too much room for game playing. For the record, I lost no money that day, and didn't have a position on. I have plenty of ways to hedge this type of outage, but I must admit it never occurred to me how it would be gamed by the floor.
Of course you're right that a backup plan is crucial, but I think you are missing his real point. First, globex charges exhorbitant fees and this type of failure is just inexcusable. They should have NASA level redundancy, but I get the impression it's about the same as a gas station uses for credit cards. Second, it is inexcusable that they favored the floor with advance notice of what would happen. I know there is a mindset that seems to come from drinking the water in chicago that an exchange membership gives you the right to cheat and steal, but it is just criminal for them to have knowledge of when they will start the system or not and trade off that knowledge while keeping retail traders in the dark. Again, I say this was a fiasco that has totally destroyed globex's credibility. It demands an investigation.
I agree with this, but my point again is that we allready know that floor traders are crooks at every exchange. And yes the CME has mirrored the exchange, but this problem is something that traders need to have a solution for. I do think that they should investigate, but what can can they realy do. Technically everybody who was trading on globex at the time kinda had the knowledge first. Wouldn't you agree? In the event that this occurrs again and a trader experiences a loss whose fault will it be the second time around if you have yet to come up with an alternative solution? Comp
The one issue that I think is unique to Old Trader's post is that, with hindsight, we now know the outage lasted the remainder of the day...But again, where was the precedent for a Globex outage that took them off line from about 10:20 (CT) until well into the late afternoon...No one really knew this was going to take that long for them to get back on-line, and while hedging was the appropriate course of action, there are so many frequent "hiccups" between what could be a temporary glitch that I believe a number of people really begin to hedge in force later in the day when it became apparent that Globex would not be back on-line, possibly until after the close...
Yes and this is correct. But we all know that technical issues will continue to occurr regardless of an exchanges redundancy and reagrdless of what types of theories we can come up with. In the event that ou notice another outage, that very second you should be looking to offsett or hedge. This should be added to your rules.
Anyone who makes a statement like "we all know the guys on the floor are a bunch of crooks" and implies a conspiracy was somehow hatched to get the off floor traders knows nothing about the CME . As I mentioned, the Merc makes $ being in operation, not being down. As for the crooks, I know a lot of them and generally they tend to be like traders everywhere. I know they were smart enough to get hedged, either long or short, when things went amiss. There should be as much indignation when someone calls a whole group of people he doesn't know a bunch of crooks as there was when I referred to those who didn't get hedged lousy traders.
Couldn't agree more. The minis are the cash cow of the CME. Why in the world would they want to shut that down? Now that they're public and the CEO has $100 Mil worth of options, earnings matter a hell of alot more than before. They didn't shut it down to hurt or help anyone. As far as pit traders "front running" orders, wake up. Every trader in the world wants to buy before the next trader, mutual fund, and hedge fund. THAT IS WHAT TRADING IS. It's buying before everyone else wants to buy, and selling before everyone else wants to sell. Every analysis in the world is based on the concept of buying/selling before everyone else. This is what drives price movement. This alleged "front running" included the smart traders who chose to hedge their short mini positions, as well as any off floor trader with half a brain. Those who "assumed" that it was going to be a short glitch, consciously took the risk that it wasn't going to be a short glitch, and lost. Plain and simple.