Whilst the NASDAQ and NYSE have market makers and specialists for purposes of ensuring orderly markets, providing liquidity and all that bollocks, I'm wondering in the futures markets (CME, CBOT etc) have something similar?
Thanks. I'm struggling to find much decent info on this (unlike the plethora that's available on the NASDAQ market maker program). Specifically looking for info on the rules governing their operation. Really want to figure out if they pull the same tricks as they do on the NASDAQ day in day out. Any hints where find some info? The CME Group website is impenetrable.
What?? There is no official position of "market maker". In new or low volume markets sometimes the exchange might pay a bonus for traders to trade, but only with paper "retail ". The rest of the markets are just private traders trying to make a living.
Basically they just get priority on some products not FIFO. Here are the matching algorithms: http://www.cmegroup.com/globex/files/PriceBanding.pdf
Let's get this straight. THEY are not the liquidity providers, YOU as a speculating market order trader are. They hold the position they took with you just long enough to accumulate enough pissant lots to offset the big position they just took with a market order hedger.
There are liquidity providers in the futures markets before the markets where electronic and the order flow went to the floor they were called locals. now they are called Lead Market Makers (LMM) as stated earlier. The lead market maker gets priority on orders and often under special exchange programs gets rebated on exchange fees (example: http://www.mgex.com/documents/LiquidityProviderPermitFINAL112608.pdf) This can be advantageous because market makers trade at a much higher frequency and scratch multiple trades whereas the common trader/investor can hold for a much longer time.
I must agree. No market makers on Globex but plenty of speculators who may use market makers. Hedging and arb trading is only for those with big money and the normal punter need not waste his time with such stuff. The old cliche smoke and mirrors comes to mind. http://www.cmegroup.com/trading/equity-index/equity-price-bands.html
I do not know if you are right or wrong and I really do not care. This is not being rude as I am just stating a point in relation to trading. To trade any market there is one think that a trader must know and many thinks that a trader need not know. Most traders concentrate on the many things they need not know and end up ignoring what they need to know. You are right to post the correct info if you are right but as noted most traders need not bother with such detail.