ICE converting swaps to futures

Discussion in 'Commodity Futures' started by TraDaToR, Jul 31, 2012.

  1. TraDaToR


  2. hoop121


  3. At first I thought this was another attempt by ICE to kill the OTC market, but I don't think it will do much at all. Just renaming their swaps to avoid regs.

    CME's OTC products are listed as "futures". The products officially designated "Cleared Swaps" by CME have 0 open interest across the board.

    And I imagine many of the current OTC restrictions will still apply for ICE's product mix going forward, ie: $1m for hedgers, $10m spec. (This is unconfirmed though)
  4. bone

    bone ET Sponsor

    Not for the vast majority of "retail oriented" accounts if they keep the contract sizing the same - the initial and performance bond margin requirements will be considerable.

    This is regulatory arbitrage, pure and simple. There used to be a regulatory and reporting advantage to trading swaps in lieu of futures - but the pending regulations do away with that.
  5. hoop121


    just spoke with my ICE representative and he said the same strict restrictions will not apply. this is good news for people like myself who would like to trade these products, but do not have the liquid net worth to qualify for access.

    he's not sure if it will be something that someone with just a regular futures account with TOS or IB, for example, will be able to trade, though. but he does think this will be the case. they just don't have all of the details yet.
  6. 2rosy


    does this mean that a small guy can actually trade these markets?
    small meaning under 100k
  7. hoop121


    that's what we are hoping for. the margin requirements for some of these products are pretty high though because they are highly volatile.
  8. TraDaToR


  9. I emailed the Director of Operations from ICE:

    Me: OK, still unclear to me, maybe you can help clarify.

    The “energy” membership notice seems to imply once the power swaps are converted to futures, they will be treated in the same manner as other ICE Futures US Products.

    For example, Interactive Brokers is a member of ICE Futures US, and I can trade everything listed on ICE Futures US, through their proprietary trading workstation, where the current product set is the old NYBOT products and then some currency products.

    So the two main questions I have are, starting October 15th:

    1) Assuming Interactive Brokers, LLC applies to be an “Energy Member”, will I be able to trade the power futures in the same manner as all the other products.

    ICE Director of OPS: No, and No ETA.. Sorry..

    2) Will the product data for the power futures be part of the ICE Futures US data package, as all the other products on ICE Futures US currently are?

    ICE Director of OPS: This stays the same as well..

    Thanks, and sorry for the confusion, it’s a difficult question to explain.
  10. I honestly don't see how this will fly.

    If IB becomes an energy member, why wouldn't they be able to electronically broker the power futures.

    ICE would basically then be calling the power swaps "futures" to avoid swaps treatment and house them at ICE Futures US, but for trading purposes would treat them completely differently from every other future traded on ICE Futures US, i.e. forcing you to use the ICE software rather than allowing a broker's software platform such as TWS to have acess, not allowing for publicly quoted bid/ask/last and historical time sales which you can't get through the current ICE platform, etc....
    #10     Sep 25, 2012