qdz2, Market Makers get lower execution fees if they answer a majority of the RFQs on a consistent basis. Most firms have an autoquoter that submits a two sided quote around Theoretical value in the Options. iRFQs aren't really necessary in the liquid futures markets. Some Option Market Makers use an AutoQuoter that actually gives a two sided quote to options at a series of strikes. As the underlying price changes the Quotes are pulled and re-enterd using new theoretical values. This creates a drag on the system, but it also populates the options screens with quotes. The exchange worked to limit this type of thing because it impacts stability. This what Def is referring to when he mentions Market Maker fees. The New fees have been implemented to address the great number of transactions sent by Automatic Trading Systems in the FUTURES. Their use is growing at a tremendous rate and the matching engine at Eurex is being put to the test. My mix of traders have not forced me to charge my clients for pulled orders, but I would bet that the firms that do charge have a great deal of ATS trades going through them. Riskless
I think we are now on the same page. In your first post, you mentioned "These fees are aimed at firms like IB's parent Timberhill, Hull Trading, Archelon and others." and above you mention correctly that they are aimed at retail (or any automated traders)
Thanks riskless for the info. Seems we were not talking about the fee for order modification or cancellation. Anyway, just leave me alone and let me keep listening. Thanks.
Each of those firms have their own Automated Trading Systems. The fees are still aimed at them. A retail ATS could not create a model that inputs and pulls trades as fast as Archelon's, Timberhill's or Hull's. Because of the amount of activity that these firms put through, Eurex is forced to implement limits on the number of orders. So basically we are on the same page, but Eurex is aiming these fees at firms with ATS as well. The fee structure is available: www.eurexchange.com/marketplace/products_funct_overview_2_en.html Riskless
Why not switch to a broker who doesn't make this charge? The fees are only charged by Eurex on a firm-wide basis i.e. if you personally sumbit 10 orders per executed trade, and 2 other traders submit 2 orders per executed trade, then as a group you have done 14:3 - as this is less than the 5:1 ratio, Eurex will not charge that group a penny. If the firm still charges the 10 order trader some fees in this case, then they are doing it purely to make a profit. The only firms that should charge it are those whose customers, as a group, on average do more than the 5:1 ratio. Most firms do not have sufficient numbers of hyperactive traders as customers to incur these Eurex fees. Just ask around and you'll find brokers who don't pass on the charges.
I'm your Prophet . Now don't kill me like in Ancient Greece just because I am the messenger of bad news http://www.elitetrader.com/vb/showthread.php?s=&postid=208149#post208149 "harrytrader Elite Member Registered: Aug 2002 Posts: 2002 02-22-03 10:30 PM Higher fees, higher account, higher margin call, higher speed, higher taxes : prepare for that or you will be washed out"