Discussion in 'Index Futures' started by flyingforget, Sep 22, 2008.
I wonder !Thank you
Your question is not clear... please ask again.
ES mini moves by 0.25
and point value is $50
FIVE-lot ES mini is equivalent to one S&P
Are asking why and how they arrived at these values?
why the mini move is 0.25 not 0.1?
Was arbitrarily set by the exchange.
I guess you are asking why the spread is 0.25 and not 0.1 like the large contract ?
The mini tick size should now only be 0.1 instead of 0.25 . When the ES was first introduced it did not have the liquidity so was priced with a bigger spread , now the ES has enormous liquidity which has surpassed the large contract and so the spread should be reduced.
When questioned a couple of market making firms said in response to the possibility of a tick reduction they all say "not if the members have anything to say about it !! "
Basically the locals who trade the large contract and are members on the floor are arbing the spread difference , and they dont want to give up their edge or profit ..
This makes the ES choppier than it should be.
A wider tick size than is justified by the market and choppier trading, all so that a small group of floor traders can make a living at the expense of everyone else.
that is exactly what I mean.
That doesn't sound like righteous justification... not here in America.
Oh, wait. That's EXACTLY how things work here in America.
here's an interesting paper on the subject , it maybe a few years old but it is still relevant and argues the point for a reduction in the tick size...