Couldn't agree more. I think there is more here than meets the eye. If I want to move size randomly ---all I have to do is Iceberg the orders. It does not matter who sees what. You can cloak orders and be crafty with a machine --as well as in open outcry. Of course, smarter traders are going to know what is up no matter what you do. Ultimately, the market is going to do what it is going to do. This idea that knowing a counterparty is bad or leads to some cheating is just amateur talk. It is just the opposite. The only people that could benefit from no counterparty info ---are the big institutions and the Govt and crooks (which includes all of the above). The Govt SPP is behind this as well as the big institutions (and some hedgefunds).
You and me TGM are futures guys. I never thought I'd see the day when Kerkorian's activity in GM was more transparent then Gelber's in the NOB spread.
Don't you think the big institutions could gather better info of small traders on a FIFO algorithm such as the US Treasuries at eCBOT thanks to the intensive use of the queue calculations and the counterparties ID# --both of these info not available to the retail trader? In this case, it seems another big squeeze against the small traders. Extend the pro-rata to all of the treasuries contracts and you have killed all the small scalpers. - Is this an amateur talk?
I traded and cleared Gelber. But I did not care who knew my hand --can't speak for others clearing 990n these days.
Whats you point? Yes this is still amateur talk. Institutions have always had an advantage on info. They have more money and more money leads to better resources to get an adge. The playing field is much more level than it was in regards to info (IMO). Now no one knows what to do with all the info. In regards to trading profitably, making money in a market is making money in a market. The skillset is transferrable no matter what they do. Unless you have some niche mechanical edge that is gaming some discrepency in the market (these have always been around and they come and go ---traders/institutions who do this type of shit always have to continue research ---this type of edge has a shelf life). You should survive with a sound strategy.
Another thing in regards to eCbot. Institutions and 'others' were pinging the shit out of the market to find out the counterparties and developing strategies to trade with the info. Now this is nothing new ---floor traders have been doing similar shit for centuries. Just feeling out the market to see where the action is or were it is going to be. Floor traders etc. will put large larders above or below the market to see what the market will do all the time. Nothing new --but electronic markets have basically allowed everone with a 2k IB account to see what is up (or try to see). Electronic trading offers more tricks and is faster. But if you are wrong ---you are still going to loose money and if you have a big order out there fooling around ----you can still get them jammed up your ass. FWIW, I do not like the order protocals for the mini spoo. They should have taken the protocal to 1k by now. That garbage back in the day of the 20lot, then 50 lot, then 250 etc. Garbage ---let it fly.
Just so we're clear I want more public participation not less. I wasn't sure if you were implying otherwise above. I would argue that detecting and exploiting counterparty information is actually more difficult on the screen than it was on the floor and that this has been a positive thing for exchange volumes. If friedman could have traded anonymously, the banks wouldn't have had a choice about trading with him and he could have sold the crap out of the pound with impunity right? Everybody is impressed by your clerking for Melamed (sincerely). However,in his own words at leomelamed.com he says: So clearly he doesn't care so much about determining counterparty, at least in regards to risk to the exchange or its members. CME and CBOT having counterparty information (on the floor and on the screen) was financially beneficial to its members who consistently exploited the information for profit. Now that the new owners of the CME and CBOT are the public who only get rich when trades are matched, anonymity becomes a key component to increasing trading volume. do you mean anachronistic like "old" or did you mean antagonistic? Your definition sounds a lot more like a mix of buying low and bullying the market to me. Frontrunning to me implies trading ahead of a large order that you know will be hitting the market. Like when you see a clerk answering the phone. Although not strictly in the definition, most people I know use the term in the context of an almost unethical or unfair behavior. I think my understanding is more normal as evidenced by this: http://en.wikipedia.org/wiki/Front_running Just because people trade successfully without it doesn't mean anonymity doesn't matter to them. Thats doesn't even make sense as an argument. Some people run fast barefoot, but that doesn't mean they wouldn't like a nice pair of nike's. Are you telling me that you didn't benefit as a local knowing Dennis' position or when he was buying? My argument is that "benefit" to you translates to "slippage" to Dennis. Both 1 and 2 involve entering legitimate hittable limit orders into the book. People are making a risk reward tradeoff that any other player is allowed to mimic (or better yet exploit) Ahhhh here's the definition of front running i'm talking about. Well I'm certainly not naive enough to belive a guy talking his position that's for sure. I have no problem with retaining records of the counterparty information to be audited later. I'd even be open to something set in the timeframe of a COT. But a realtime camera into every participants account is another story altogether. If i'm a customer that's big enough to bother frontrunning, i'm going to be able to afford the IT staff, equipment and sophistication to execute through multiple brokerages. In other words, in your suggested model the only people that truly have anonymity are gigantic ass funds and banks. Personally i'd rather we all had the same playing field as much as possible. I guess speculating with purity means enjoying massive slippage in and out of every position you enter. People who are speculating with purity shouldn't "give a flying fuck" who they are trading against either by the way.
I wrote: >>Don't you think the big institutions could gather better info of small traders on a FIFO algorithm such as the US Treasuries at eCBOT thanks to the intensive use of the queue calculations and the counterparties ID# --both of these info not available to the retail trader? In this case, it seems another big squeeze against the small traders. Extend the pro-rata to all of the treasuries contracts and you have killed all the small scalpers. >> TGM tahnks for your contribution, but it seems to me you did not deal with my observations directly but you wrote a discussion 'at-a-large'. Also market_hacker made interesting comments on Pabst posts.
thanks, i'm glad someone read them. the thread died after my post, i thought maybe i bored everyone to death. Oh, and btw the CBOT reversed their position at the last second and will continue to give counterparty info away through back office feeds. Of course not everybody has access to it, and it flies directly in the face of statements on their website touting the CBOT as "anonymous". Chris Hehmeyer wrote a letter about the issue that was published in lothian's newsletter: here it is: --------------------- CBOT pulls back 100% anonymity at last second CBOT is now the only electronic futures exchange without anonymity. The CME completed their conversion to anonymity on July 2nd. The CBOT, working with CME Clearing, also had the technical issues resolved and the technology ready to convert to anonymity on July 2nd --and it aborted the conversion at the last second. Not surprisingly, CBOT management is strongly in favor of converting to anonymity, but there are a few members who have been able to influence the member-controlled board of directors into denying anonymity. Volume suffers and we all know what that means. While the underlying debt of Eurexâs 10 yr Bund is one/seventh the underlying debt of CBOTâs 10 yr Note, amazingly the 10 yr Bund futures trade twice the volume of our 10 yr Note futures. Some part of this discrepancy is due to CBOTâs lack of anonymity. It all starts with some participants spending most of their time deciding how and where to piece their orders in the market so that their trading logic isnât detectedâ¦instead of trading freely. Next, the few members who first started taking advantage of the data are tracked extensively, resulting in them being paranoid and trading less. In the end, all market participants become timid, volume suffers, and CBOT stock price suffers. Further, allowing a few members to use what should be confidential data as a crutch to the detriment of others reeks of unfairness. As long as CBOTâs lack of anonymity exists there will be this constant question of integrity. This doubt leads to the general PR hit which causes CBOT participants to continually ponder what other unfair CBOT policies they may be unknowingly exposed to. As a shareholder and member of the CBOT, its lack of anonymity is embarrassing. This is a serious issue that will not go away and should be cleaned up. Until the CBOT converts to 100% anonymity, I will relentlessly continue to educate the world on how all the logic stacks up to make this an easy decision. In closing on a positive note, the fact that the central clearinghouse concept fits perfectly with anonymity is a big asset for the futures industry. In fact, all futures exchanges ought to advertise anonymity aggressively. It promotes tremendous confidence, truth, integrity, and increases volume. Respectfully, Chris Hehmeyer Co-Chairman Goldenberg Hehmeyer & Co. www.ghco.com