i read that there were 8 future echanges in the U.S., but it is hard to tell how many there are because of sub-divisions and all. Does anyone know all 8 exchanges and their sub-divisions Here is a starter list... 1 CME 2 CBOT 3 MGEX - Minniappolis Grain Ex, 4 NYCE - NY Commodity Exchange 5. NY Cotton Exchange 6. NY Mercantile Exchange 7. CSCE Coffe Sugar and Cocoa Ex. 8. KC Board of Trade 9. IPE - Int'l Petroleum Exchange 10. Mid-America Commodity Exchange
Mid-am is part of the CBOT. Everybody knew this was coming. My impression is that it was the brokers who were the biggest opponents of electronic trading, at least at the Merc. The equity index futures have migrated to electronic trading with the Mini nasdaq dwarfing the pit and the S&P mini doing an equal total dollar volume. The e S&P has been growing substantially this year however it still has a ways to go in equalling the open interest of its bigger brother. If it weren't for the facts surrounding the futures of floor based exchanges, now would be the best time to go on the floor. A beginner could have a very expensive learning experience, however, paying $500 bucks a month pales in comparision to 10,000. Even during the late nineties when people were making money, seat lease cost stacked the deck against you. The extra ten grand offers a lot leeway for experimentation and stupid mistakes. While the lesson may cost you the same, the value you receive from one today is much greater than a few years ago. Being an option MM is probably a little easier than a stock day trader. However, the barriers to entry are a lot higher in options, point and click versus actually having to study something is just one example. Does anybody know how much the BOX is going to cost a month? I hated the floor and would only trade on an electronic market. Firms similar to the prop firms most people are familiar with on this board would likely emerge. The only option group I remember actively pursuing this strategy on the floor was a firm in Amsterdam. There were people here in the U.S. doing the same thing but I don't remember anybody being aggressive about it. I think they had high upfront fees and still took a big cut. If you bought me beers after the close, I could probably fulfill the same function.
A person would never go to the floor of the S&P pit at the CME without a couple years successful open outcry experience in one of the other smaller pits or at regional exchanges such as Kansas City or Minneapolis.
I beg to differ, but I know a number of people who have; not counting runners or clerks working their way up.
It doesn't seem that option MM clearing firms and groups underneath them pursue novice traders who could put up their own capital. Despite Don Bright taking a beating on this board about how much prop firms train their new people, at least they do it and are aggressive about promoting such when recruiting. There does not seem to any decent resources for option traders. Of course they exist, but, you would never know it searching around the interent. What you end up finding seems pretty cheeseball with the exception being MacMillan. If somebody wanted to become a professional on or off the floor, they wouldn't have a clue on how to go about doing so. The question gets posted once in a while on which prop firms allow option trading. Don Bright answer them with the usual that they discourage it. However, there are many other firm out there who cater to other areas besides stock day trading. The futures business does a pretty decent job of marketing itself. There seems to be a fair amount info for retail and prop trading in that area. Nobody ever mentions calling up Bear or Foc if you have enough money. It doesn't take substantial capital to go down to the floor with one of these guys, however, it is probably more than the people asking the question have. The advent of electronic trading has opened opportunities for a lot of people. For decades, the number of people who could trade professionally in the futures markets was limited by a lot of different factors. There was a limited amount of seats. If you didn't live in a city with a market you would have to move. etc, etc... The clearing firms and and other service providers who cater to professionals( I would define this as somebody with sufficient capital and depends on the earnings for food) because the universe was so small. With electronic trading, this all changed as nearly an unlimited number could day trade professionally the e-mini. The current options market place is fairly small for prop traders. It is closed system in much the same way the futures industry was. It has only gotten worse as exchanges have tried to tighten their grip over order flow. That summarizes the background which lead me to think that the BOX could have fairly large impact on way business is handled. Simply allowing an unlimited number of traders on the system would cause clearing firms and groups to alter how they attracted business. They would seek to expand the number of contracts executed. How do you do that? The same way Don does. The position changes from looking at it from a small universe of locals and off-floor traders to potentailly anybody thinking about trading any product. There is something like 4000 seats on the 5 exchanges, that number could double in an open system like the BOX and Eurex. You would try and attract new traders the same way the current prop firms do. Another reason is that the cost structure seems like it be better at the BOX. A single flat rate for access is preferable to an unstable potentially large chunk of cash coming out each month. Like I said in the previous post, it is difficult for a new trader to start by losing 5 or ten grand before they even make a trade. I was lucky, my first trading job was in Amsterdam, where the per month fees were a fraction of the U.S. exchanges at the time. Just thoughts.
So are there any option prop firms around that cater to remote traders who can bring in capital? - much like the LLC's here that primarily caters to stock traders?