Given the increased leverage and no uptick rule (I think IB's $1/contract will prove to be low among the initial group to offer SSFs) - kind of takes away the two major reasons to trade at a prop firm vs. IB. From what I read though, NQLX will be much better than OneChicago. My sense is OneChicago (a partnership of the options exchanges) will trade more like the CBOE/AMEX (even using .05 minimum spreads like options - total BS!) INFERIOR to the NQLX which is totally electronic and .01 min. spreads, ala Globex or Nasdaq. I think SSFs will be HUGE, they effectively eliminate the $25k daytrader rule, uptick rule, and Reg T? Granted, the liquidity must be there for it to work.
I don't know how you can say that NQLX will be better than OneChicago. Are you a New Yorker? Being from Chicago, I guess I have to do my part to defend OneChicago. OneChicago will be fully electronic. They have picked CBOEdirect as the matching engine over the Globex system. http://www.onechicago.com/20020108.asp I fooled around with this system and in my opinion, this platform is much better suited to get a product off the ground. It obligates the market makers to provide a two sided quote and has strict time priority with a twist. If favours retail orders over MM qutoes and orders so that as a retail customer, you can join the bid/ask and be put in the queue after all the retail orders but ahead of the "institutional" quote/orders. It looks promising since it provides all the SEC mandated retail protection/favouratism of options with non of the games they can play on the floor. Does anyone know what matching scheme NQLX provides? Does it offer more than just strict time price priority? One more thing... OneChicago is a partnership between CBOE and CME with CBOT being a minority partner and not a partnership between options exchanges. And remember CME picked CBOEdirect over their own Globex system.
Navigator, thanks for the info. Actually, I lived in NY for a few years, but I like Chicago alot actually. My ex lives there so my current girlfriend has banned me from visiting Chi-town however There is some PDFs here about the NQLX system, I glanced over them. http://www.nqlx.com/NQLX/TechOps/ApprovedISV.stm Still I have doubts about a .05 spread vs. a .01 spread (unless Im wrong about that - that was my understanding), you'll be paying up on OneChicago. Those pennies add up, of course if the liquidity isn't there gonna be wider spreads on the NQLX also.
Q. Will SSF be aforded the 60/40 capital gains for Section 1256 contracts? A. According to Robert Green, CPA, in the May issue of Active Trader Magazine, states "As a rule of thumb, futures on broad-based indices(such as the S&P 500 futures) are Section 1256 contracts, while futures on narrow-based indices(indices that cover stocks in one industry or sector, such as the Philadelphia Stock Exchange semiconductor index) are treated as equities. Will this be the case for SSF, they will be treated as equites for tax purposes and not get the Section 1256 futures contracts, 60(short term)/40(long term) captial gains rates?
Based on all of the articles and press releases that I've read, SSF's will be treated as narrow-based indicies and will not receive that favorable tax treatment....