But they now have globex terminals surrounding the pit. When the guys trading the minis see goldman buying, they front run them. Since executions are faster in minis, minis are now leading the big contract.
Anybody actually trade these big lots? I'm confused as to whether it's better to try and get a flash fill on a couple of big contracts or just trade a lot more of the minis.
Sorry, but I don't get the "monopolistic", "thieving pit traders", "death to the locals", etc. mentality. These guys are paying huge bucks to be on the floor; they either lease a seat for circa $3300/mo or buy an IOM membership for circa $277k. Then deal with the steaming, stinking, rancorous, cut-throat conditions that exist in the pit. The vast majority put their own funds at risk and all of them put their personal well being on the line (encountering maladies from tinnitus to tuberculosis). Further, it should be noted that they don't exclude anyone from membership provided certain (rather minimal) requirements are met. Most everyone is perfectly free to become a member and trade on the floor. In fact, I'm sure they'd like nothing more than to have a couple of million members all trading in a pit the size of Rhode Island.
Trader777; Agreed that locals front run the screen when large orders hit the pit. However I don't see that as evidence of the screen being the leader. Ultimate price discovery comes from those large Goldman orders not from retail. As far as fees in the minis: the CME for the last 2 years has beeb a for profit corp. Never was before. This has allowed members to be "hedged" if Globex overtakes the pit. The worry was that seat prices would only have value relative to open outcry opportunities i.e. LIFFE. Now even if everything goes electronic, Globex fees will provide some dividend to members. Seat prices are VERY volatile. And by the way I have been a member of both the CBOT and CME so I have no negative axe to grind.
The sooner the big S&P goes fully electronic the better.... close the pits..... throw away black and white tv's... shut down chicago.. don't know why the US is so slooow to catch up with the world..... maybe we should add a exchange dead pool....who's gonna disappear first.... checking out the seat prices it looks like Amex is a runaway leader..... not sure about the philly but do we really need 2 chicago exchanges?? who's your money on
@Optrader: i have the strict opinion that a modern market should be democratic. and the currently existing pit/electronic solution is _not_ democratic. that is all i am embarrassed about. not everybody has the freedom to bid up for a seat, maybe for financial reasons or because of not being able to move to chicago. cme should drop the e-mini trade fees to a realistic level _now_ and then everything would regulate itself. Sascha
I would not confirm that by all means. It looks like the mini leads because prices of the big ones are reported with a delay by the exchange (typed manually) and trades are not so frequent. but in terms "when a floor trader decides in his MIND to buy/sell", the big still leads the mini, the rest is only a matter which fill seems to be closer (...has the trader a G2 terminal or another trader next to him??)
I recall people starting to talk about this (seriously) probably 5 years ago. When it reached a fevered pitch a few years later, the argument was made that the last hurdle to all-electronic-all-the-time could only be Y2k concerns. Obviously, those are well behind us. Parenthetically, the prevailing view around that time was that over 70% of residential customers would have access to both DSL and cable internet within a couple of years..........uhhhhhh.