Will single stock futures replace stocks?

Discussion in 'Financial Futures' started by qazmax, Jun 11, 2002.

  1. qazmax


    Does anyone think it is possible for SSF (single stock futures) to replace stocks as the primary security to trade?

    With lower margin will all day traders soon switch entirely over to SSF?

    Or will it be a flop...??

    Who will be te #1 one floor? NQLX, OneChicago, AMEX. Make your pick now, for the record, and say why.


  2. I assume SSF's will not be subject to the PDT rule?
  3. qazmax


    PDT rule applies to all "securities", but I do not know if SSF will fall into this category.

    Does anyone know for sure? I will try and find out today.
  4. I am pretty sure futures (and commodities for that matter) are not considered "securities" in the regulatory sense.
  5. I having a long call/interview with one of the heads of OneChicago today, as a follow up to my last SSF article. I have quite a few questions already, but if anyone here has specifics they would like answers to, I would be glad to ask.

    I'll post a short review after the conversation.

  6. Don,some questions to throw at them.
    1)Will the contracts be fungible among all the venues?
    2)Will they be subject to the PDT rule?
    3)When will they begin trading?
    4)What are the margin requirements and tax ramifications?
  7. qazmax


    As you probably read... do the day trading rules apply to SSF?

    I heard they decided on 20% margin, well above the normal for futures (8-10% as I hear).
    How does this number work?
    Does it fluctuate with the volatility of the underlyng stock?

    Can give an excample of margin calculation?
    E.g. margin for 30 vol stock? 50 vol stock? 70 vol stock?

    Aside from a full on short assault during a bear markets, and fine tuning index portfolios... what are the type of uses for SSF?

    What advantages will it offer that cannot be achieved with a long call and short puts postions, and vice-versa. Since these are essentially the same thing.

    Are all 3 parties readies to go? NQLX, AMEX and One Chicago?

    Can ECNs list these securites?

    Will there be a constant 2-sided market, bid and ask, dissiminated like options and stock, or will it be last trade only like futures?

    What are the tax advantages of SSF, if any? I heard they are gong to be 100% short-term capital gains.

    When are they going to put the online test to register for trading in these SSF? And where?

    WHat are the 3 biggest han-g-ups right now to the release of SSF in the U.S.?

    How is the overseas reception of SSF these days? Is volume picking up or falling off?
  8. qazmax


    Right you are... futures are not considered securties. But SSF have been dually listed with the CFTC and the SEC. SEC handles securities typically.

    Also.... another question... how will the broker accounts determine the regulatory body for SSF. Before they were saying the client would have to chose if they were going to be regulated by the SEC or CFTC? Then SIPC insurance would not cover some accounts?

    Has this changed?

  9. Don't hold your breath for this product. The securities industry is not exactly crazy about losing the juicy fees for lending short stock, nor do they want to hand over more power to Chicago futures exchanges. They are stalling and SEC Chairman Pitt is their boy.

    The key to success will be liquidity. One problem brought about by the lengthy gestation process is that some of the stocks selected to be included were high fliers at the time but now are busted single digit washouts. So right off the bat about half the stocks are useless. My guess is about 10 stocks will see a lot of SSF action and the rest will be kind of like the options market, wide spreads, no action.
  10. To me,if one is already receiving 5 or more to 1 leverage(through a pro firm),SSF's won't really offer any advantages compared to stocks,except for the ability to short on downticks.If this rule is ever abolished for stocks,they really won't offer any advantages,in my opinion.
    #10     Jun 11, 2002