Interesting, I was never a floor trader, being mostly an upstairs quant and all. But to give some context in today's automated systems. An automated system that does 10,000-20,000 a side today is not that big (probably considered "medium"), I know of 2-3 systems that averages 150,000 a side a day (maybe pushing 300k on a busy day like 6/8), or about 3M contracts per month. The going rate for automated system is about 3-5 cents, I have seen as low as 1 cent (not me). I walked to the 10 year pit the other day to talk to somebody I haven't talked to for a long time, and I stuck around for the open, there was literally no paper activity, everyone is staring at their screens. I thought, these guys might as well be in an office then.
During rollover there's still a bit of spread activity on the floor but the number of outrights traded is rapidly plunging to zero.....
The fact that Rick Santelli is having an increasingly hard time finding a live pit to hang out says it all.......
Rufus, could you elaborate on how you think these systems are working, because it seems now that most markets have these automated systems now. Do you think the systems are mostly in house systems from goldmans etc, or are you seeing big locals using them. thanks snap
my own experience does not agree with this 100% many times i saw money market futures (short sterling & euribor - like eurodollars) trade way past any concept of fair value. we still see this today on the screen and pit in any financial futures market on report times. perhaps why you say 'rarely'? other times i would see it happen around lunch times or other quiet times. sometimes it happens when its busy. at the end of the day, its about who has the most bunce. arb players get fucked too you know!
there is probably more stop running in fx (and i mean the spot market not bucket shops - where there is far more) than any other market. and they say fx is the most liquid market in the world (i dont agree with that btw) - so according to the common theory, the more liquid the market, the harder it is to run stops. obviously not. the bigger the market, the higher the stakes. market gunna getchya!
Don't misconstrue Fred. I never said that markets can't trade beyond fair value. If they didn't there wouldn't be much trade, eh? What I said is locals don't push markets beyond fair value in search of stops. There's easier money than selling something that you know will be bid aggressively. On top of it, brokers don't have to execute those stops. Nothing makes a floor broker look like a bigger hero to his customer than telling a desk "I did nothing on your sell stop at 4" as the market comes back 6 bid. As far as arbs getting fucked, not often enough. John Corzine was the long bond trader at Goldman, Dick Fuld at Lehman. Each are worth a half billion today. No locals can make that claim......
Eurodollars are still rockin' In the back outrights and bundles screen volume doesn't even compare to pit
We rarely have cnbc on with sound but I've seen him down here a couple times already, usually with a hot intern or a guy making funny faces in the background