Peter, thanks for your reply. I take full responsibility for my comments I posted on the other thread, so please don't blame tar - he is as he says, only the messenger.
I don't believe I have misrepresented CMC, I have merely reported the facts as I see them (with my own personal opinion added in admittedly), and have supported my claims with the evidence in the other thread. As your statement shows, the charge is 56%.
Obviously you have a reason for applying a charge that large (you don't just charge ad-hoc without a reason), and I understand that you have applied the charge in accordance with a method that you've devised to replicate the differences between a 'cash' price and a futures price, but it's this method that raises the issues. 54% works out at (all roughly) $50 annualised, which over 2 months to Apr expiry is a premium of 8 or 9 dollars. Some days it might be that large, but I guess it's pretty unusual. I imagine the reason you've decided to go down this route is your business model. Rather than these costs being built in to the instrument itself, by devolving the futures price to a spot price it means you can pick up the financing charges in fees rather than them 'expiring' gradually over time within the contract. Not a bad idea. The trouble is it's more expensive for the customer! The customer ends up paying financing + 2 or 3% and varying costs of carriage (which in my case have been varying to the upside enormously) rather than a fixed cost determined at the level the trade was opened.
A separate issue is one of customer service. I did try to get an explanation from your team when I noticed these costs were escalating, but the gentleman I spoke to couldn't help. He put me on hold for a while while he asked someone else, but they couldn't explain the details of the charges either. I was told he would find out and email me some information, but the email never arrived. As a result I felt it was appropriate to post a comment on a public forum. I do thank you for taking the time to reply and explain though, maybe you could make the details more available on your website and to your staff. I am sorry if I have made you cross with my comments, that wasn't my intention.
All the best,
Simon
I don't believe I have misrepresented CMC, I have merely reported the facts as I see them (with my own personal opinion added in admittedly), and have supported my claims with the evidence in the other thread. As your statement shows, the charge is 56%.
Obviously you have a reason for applying a charge that large (you don't just charge ad-hoc without a reason), and I understand that you have applied the charge in accordance with a method that you've devised to replicate the differences between a 'cash' price and a futures price, but it's this method that raises the issues. 54% works out at (all roughly) $50 annualised, which over 2 months to Apr expiry is a premium of 8 or 9 dollars. Some days it might be that large, but I guess it's pretty unusual. I imagine the reason you've decided to go down this route is your business model. Rather than these costs being built in to the instrument itself, by devolving the futures price to a spot price it means you can pick up the financing charges in fees rather than them 'expiring' gradually over time within the contract. Not a bad idea. The trouble is it's more expensive for the customer! The customer ends up paying financing + 2 or 3% and varying costs of carriage (which in my case have been varying to the upside enormously) rather than a fixed cost determined at the level the trade was opened.
A separate issue is one of customer service. I did try to get an explanation from your team when I noticed these costs were escalating, but the gentleman I spoke to couldn't help. He put me on hold for a while while he asked someone else, but they couldn't explain the details of the charges either. I was told he would find out and email me some information, but the email never arrived. As a result I felt it was appropriate to post a comment on a public forum. I do thank you for taking the time to reply and explain though, maybe you could make the details more available on your website and to your staff. I am sorry if I have made you cross with my comments, that wasn't my intention.
All the best,
Simon
