will NQ spread drop to ES spread level?

Discussion in 'Index Futures' started by canadian_dude, Jul 2, 2002.

  1. Since we are now taking a poll to debate whether NQ will drop below ES this month, isn't it time for the CME to lower the NQ spread from 1/2 point to 1/4 point, and bring it in line with the spread on the ES? Do you think they will do this?
  2. arbster


    No Way...The Members would never let this happen.

    They are starving already...because of the the faster connection speeds to the matching engine..they are having to compete for trades from off-the floor traders like yourself, in Canada no less.
  3. The minimum tick on NQ (half point) is $10 which is very similar to ES (quarter point) which is $12.50.
  4. Furthermore, there typically seems to be less than half the contracts bid/ask on NQ when compared to ES. It just takes a while to get used to the wilder jumps (too me a while at least).
  5. Aaron


    Reducing the minimum tick size is a great idea! I agree with Vikana that the ES is the first candidate given how much size there is on the bid and asked. But then the CME should reduce the tick size on the NQ also.

    And then the CME should reduce their fees...
  6. I don't think reducing the min tick size will have the impact you expect. Why does ES have lots of liquidity and a tight spread with good depth? $12.50 per tick plus heavy pit to globex machine arbing plus lots of institutional arbing. I would guess that 80% of the size we see is a result of arbitrage. If you cut the minimum tick you cut the arbs' profits. If you cut the arbs' profits they will go elsewhere and thus you are left with a less liquid market and a lower minimum tick (remind you of the stock market?)

    As far as the CME reducing their fees, I think that would only increase trade volume and thus increase fees for the CME. Rolling price back say $.50 to $1.00 for retail customers would probably be a good business decision. And if they were really smart they would eliminate all data fees. More exposure just means more volume and more fees.
  7. What do you think is the impact of the CME becoming a for-profit organization? Will it seek to reduce fees or increase them?
  8. JayS


  9. Fitz


    Why would you want them to do that? That would be like what they did to the stock market by going to decimals. The es/nq markets are just fine the way they are now IMO. I might be wrong, but I don't think that is what Vikana was saying anyway.

    Now it seems you are in the prop shop biz, so if they did reduce the tick size then that would mean more commissions for you I bet. Maybe that is your angle?!?
  10. Aaron


    You don't like that equities are now traded in decimals? I like it a lot. I can narrow the spread and get in front of other traders if I want to be more certain of a fill on a limit order. I'd like to be able to do the same thing with the ES and NQ. And if I want to enter a market order, I'd rather pay a smaller spread than a larger one. What is not to like about narrower spreads unless you are a market maker? Please elaborate further.

    Schindler Trading is a Commodity Trading Advisor and hedge fund manager. We <i>pay</i> commissions and bid-asked spreads. The lower our transaction costs the better.
    #10     Jul 2, 2002