Holy crap, now thinkorswim is restricting both June AND July to closing only. And only allowing closing trades for CL options too. That one makes ZERO sense at all, because nobody can lose more than 100% buying an option. WTF
Majority of Thinkorswim/TDA customers are retail investors and traders, and they pitch the model of safety in investments, especially given their large number of financial advisors after retail investor's retirement accounts, and their business primarily makes money on achieving a large AUM and profiting from interest rate differentials, it makes sense for them shut down any futures business that is considered too risky. I wouldn't be surprised if they continue to limit commodity offerings based on market conditions. I can understand that if oil futures went slightly negative that it would not cost much harm to their commodity futures offerings however since the contract was settled at negative $37 a lot of their retail futures customers probably got burned and thus the fact that some of their customers incurred large negative deficits in their accounts would not bode well publicly given what their business model has been advertised to be. Also TDA also allows futures trading in IRA accounts, with the contracts going into the negative, that means the IRA accounts could have gone into the negative as well. That also does not bode well for compliance and regulatory oversight.
On IB it’s “CLM0”. They didn’t suspend any so far, but the negative prices screwed up the quotes and charts for May. I understand you couldn’t trade May that day since it was too close to delivery, but I didn’t try.
Brokerages tell clients - no buying oil for two months https://www.reuters.com/article/us-...ts-no-buying-oil-for-two-months-idUSKCN2253P6
April 8th notice https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2020/04/Chadv20-152.pdf April 21st notice https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2020/04/Chadv20-171.pdf
So long story short CME says prices can ALWAYS go negative and its totally normal and its UP TO THE FCM to make sure participants know. Being unbiased here sounds like CME did their part but the brokers did not
Their response seems to be a bit of backpeddaling. I think it's BS when they say futures could always go negative. Well yeah, based on the obscure way they define the fields that equal an instrument. (The MDP security definition as listed below). If that were true, then why the need to send out notices that the products were in POTENTIAL support for neg prices, if they were already designed to do so? This is the text from the notice I got on April 5th... Changes to Price and Strike Price Eligibility Flags for Certain Energy Products Today Sunday, April 5 (trade date Monday, April 6), as an operational step toward potentially supporting negative pricing and strikes, the MDP 3 Security Definition (tag 35-MsgType=d) for these Energy outright futures and options on CME Globex will be flagged as eligible to trade at negative prices. The options on futures will also be flagged as negative strike price eligible. Trading at negative prices for these outright markets will not be supported at this time. Negative strike prices will not be listed. Negative order prices will be rejected with Execution Report (tag 35-MsgType=8) message: Reject code tag 103-OrdRejReason = 1012 Tag 58-Text=<’Price must be greater than zero'> Any changes will be published in future CME Globex Notices. Negative trade price instruments, and negative strike price eligible instruments, are identified in the MDP 3.0 Security Definition (tag 35-MsgType=d), in repeating group tag 871-InstAttribType: tag 872-InstAttribValue= 9: Negative Strike Eligible tag 872-InstAttribValue=10: Negative Price Eligible tag 872-InstAttribValue= 14: Zero Price Eligible --------------------------------- So yes, futures were always negative capable, AS OF APRIL 5TH, but who the hell can discern that low-level of coding into each instrument anyways? And there's something else... Last Monday when May CL went negative, it clearly showed on their quote screen that there were low limits in place on CL. Here is what they look like on QM, as of this evening... Low limit on QM shows .025. On Monday last week CL was showing a very similar thing...No upper limit, but a low-limit of .01. (Yes, a penny.) Now the Hi/Low limit column is conspicuously absent on the CL quote page. *rubs chin thoughtfully*
I am drilling him on is it always the case or not, and what is the "depends" based on I dont like to believe in conspiracy or manipulation theories, but the fact this contract settled on -37.6 only 3 bucks away from the low tells that there is something fishy going on, and the next day it bounced back up to 10 bucks. The Monday price is the price most brokers use to settle the contract and most people cant trade on Tuesday. What happened from Monday to Tuesday, your telling me the storage issue got fixed? in one day? lolz Something fishy AND obvious is here
It is really water under the bridge at this point. You should now assume that all CME energy products listed here https://www.cmegroup.com/content/da...Price-and-Strike-Eligibility-Flag20200403.pdf can trade negative, and the low-limit breakers they show on the quote screen are false.