OK, bro, you're next. Futures brokers will be commission free soon too. If stock guys can make enough off orderflow so can you.
The CME or any Futures exchange out there, does not compensate us brokers for order flow. I am not sure where the direction of commissions is going from here, but most of the cost now goes to the exchnages and technology providers, not always the brokers. Second, please do not forget the high leverage provided in Futures relative to the margin you post (not to mention the day trading margins). The leverage provided in stock is very low, and the cost is pretty high. If you research the price for shares when it comes to leverage trading versus the notional amount you get in Futures, you will see that Futures are cheaper.
The blowout that is going on with stock brokers like Schwab and TD Ameritrade will not hit Future brokers. There's no reason for it to. I'll stick with my current futures broker, and not flock to the nearest broker that can save me a few bux on a futures trade, par value. I simply cannot swing that size of a trade.
Our orders are DMA-Direct Market Access straight to the exchange. But, Futures exchanges are separate entities and are not connected to the stock exchnages.
Technically not straight, they first go through your pre-trade risk checks which I hope you guys employ. Sorry I am still not familiar whether you guys are an ib or an fcm.
My broker AMP Futures charges me $0.75 ($0.25 commission + $0.5 clearing) per contract for /ES while Exchange+NFA fee is $1.2 ($1.18+$0.02). Frankly, I don't think they have much room to lower their fee. To reduce your trading cost further, you may want to consider achieve CME membership instead.
So I guess the execution model is different because retail stock brokers sell their order flow to HFTs.