IPE vs Nymex crude volume

[jimbo57]

I have no doubt that the pit will die eventually, but I have to argue with your logic. If the average trade size on globex is 4 lots in the front month (dividing one number by the other) then that is no use to anyone other than small retail punters, and the big institutional traders and hedgers will still need to go where the volume is, and not where it might be.

ICE gained quickly because of its initial ownership structure, the bigbanks and oil cos traders were incentivised directly to place volume there. Given the way NYMEX has largely screwed its locals, globex's growth I suspect will be a lot slower.

 

[Directional]

ICE gained quickly because of its initial ownership structure, the bigbanks and oil cos traders were incentivised directly to place volume there. Given the way NYMEX has largely screwed its locals, globex's growth I suspect will be a lot slower.

ICE's market growth was also helped along by the fact that they closed the floor quite soon after launching the electronic contract... the locals HAD to trade on the screen or not at all.

Also, ICE's electronic exchange fee is nearly half the $1.50 a side Nymex are levying... I dont know what the fee's are in the pit, but I'd imagine the ICE 80c a side fee was sufficiently attractive to lure a reasonable bit of coprorate business to ICE WTI once the liquidity had been established.

 

[jimbo57]

ICE's market growth was also helped along by the fact that they closed the floor quite soon after launching the electronic contract... the locals HAD to trade on the screen or not at all.

Also, ICE's electronic exchange fee is nearly half the $1.50 a side Nymex are levying... I dont know what the fee's are in the pit, but I'd imagine the ICE 80c a side fee was sufficiently attractive to lure a reasonable bit of coprorate business to ICE WTI once the liquidity had been established.

agreed

 

[jmreeve]

I have no doubt that the pit will die eventually, but I have to argue with your logic. If the average trade size on globex is 4 lots in the front month (dividing one number by the other) then that is no use to anyone other than small retail punters, and the big institutional traders and hedgers will still need to go where the volume is, and not where it might be.

ICE gained quickly because of its initial ownership structure, the bigbanks and oil cos traders were incentivised directly to place volume there. Given the way NYMEX has largely screwed its locals, globex's growth I suspect will be a lot slower.

Volume and liquidity are not the same thing.
Large traders will go where there is liquidity and liquidity providers tend to be attracted to where there is lots of action. Hence, more trading leads to more liquidity leads to more volume.
This seems to be the way it has worked with other markets that have gone electronic.

 

[jimbo57]

Volume and liquidity are not the same thing.
Large traders will go where there is liquidity and liquidity providers tend to be attracted to where there is lots of action. Hence, more trading leads to more liquidity leads to more volume.
This seems to be the way it has worked with other markets that have gone electronic.

I understand that volume and liquidity are different things but consider this.

Liquidity is generally a condition where you can enter and exit a market in reasonable size without materially affecting the price - agreed?

But in a market like oil that trades significant volumes, this generally means that you cannot do this, enter and exit for material size that is, without accompanying volume. More trading can often just mean more small mice chasing a little less cheese perhaps. The cats are still playing somewhere else, and currently at least it is the cats that lay traps for the mice.

As I said earlier I agree that the pit will die, but not yet, and to call its death prematurely might be a dangerous route to follow

 

[jmreeve]

Yes, agreed about liquidity.

The advantage with an electronic market is you can set up an algo and leave it to handle a sizeable order. This is a lot less visible than trying to do big orders in the pit.

In terms of playing else where, the block trading facilities are where the big shady dealings are done.

 

[medines]

if you want a scientific research with a comparison between the old cotation and the electronic system cotation in the ICE you have only to ask for this.

 

[Directional]

In terms of playing else where, the block trading facilities are where the big shady dealings are done.

yeah, block trading seriously sucks. I've been waiting for fills and seen enormous orders slip through on a block that was prices away from the current market. Extremely unfair, but the exchanges dont care because they still get their fee's and they didnt actually have to do anything for it.

 

[jmreeve]

Not sure of the reporting rules on these trades but the block order was probably done at a different
time from when it was actually reported to help add to the confusion.

 

[Interactive Brokers]

ANNOUNCEMENT:

Effective 16 Oct 2006, Interactive Brokers has reduced its fees to trade the ICE Brent and Gas futures.

Before, $3.20 per side (Brent and Gas futures) all-in.
Now, $2.40 per side (Brent and Gas futures) all-in.

$5,000 minimum to open an account.
$10 minimum brokerage fee per month.
$1 to view live streaming prices for the ICE products.
Nil technology fees.
Nil charting package.

IB offers Direct Access and supports over 40 order types. We provide account protection, pay interest on deposits over GBP 6,000 and are regulated by the FSA. www.interactivebrokers.co.uk

 

[umm]

not all as it seems

yeah, block trading seriously sucks. I've been waiting for fills and seen enormous orders slip through on a block that was prices away from the current market. Extremely unfair, but the exchanges dont care because they still get their fee's and they didnt actually have to do anything for it.

a little known fact about ICE. unlike exchanges like LIFFE, CME, etc. when a calendar spread goes through the market, the implied prices that the exchange use to form the correct legs are not always current best bids or offers.

Hence on front end software such as TT and Pats you will see last traded volumes both above and below market. this isnt someone stealing better prices from under your nose its as simple as ICE being inefficient at calendar levels.

 

[holy man]

thank god neither Pats TT or for that matter ICE are able to match spreads efficiently as this allows me to run rings around them.....

 

[umm]

thank god for high ticks!

 

[scotty_dog]

Please excuse my Energy ignorance...

Given what's been going on with ICE, NYMEX, pits vs screens, could someone kindly tell me what are now the best contracts to trade electronically in European AM & PM sessions? ICE Brent? ICE WTI?

Cheers,
scotty_dog

EDIT:
Best as in liquidity, volatility, opportunity.

 

[umm]

Please excuse my Energy ignorance...

Given what's been going on with ICE, NYMEX, pits vs screens, could someone kindly tell me what are now the best contracts to trade electronically in European AM & PM sessions? ICE Brent? ICE WTI?

Cheers,
scotty_dog

EDIT:
Best as in liquidity, volatility, opportunity.

Well ICE are definately winning the battle for liquidiy, etc. both AM and PM . so your right, the best contracts to trade are Brent and WTI both on ICE all through the day

 

[scotty_dog]

Well ICE are definately winning the battle for liquidiy, etc. both AM and PM . so your right, the best contracts to trade are Brent and WTI both on ICE all through the day

OK, thanks for that.

 

[Directional]

Nymex can partly thank their rip-off exchange fee's for their slow start into the electronic contracts. You'd think they'd have had the foresight to try a fee holiday or electronic incentive to get their contracts off the ground in a competitive environment, where ICE have had the head start.

 

[umm]

thats half the problem.. they have been offering incentives. a couple months ago i literally couldn't go a day without someone from NYMEX/CME calling me up asking me to trade it and they would offer me this and that. but the fact its as simple as who was first to the punch, in this case that was ICE. Although, i have started hearing rumours that ICE are starting to enquire about a renewed market making programme for WTI, could this be a sign of the mighty ICE starting to fear the ever expanding arm of CME GROUP??

 

[minx]

I think that unless ICE team up with another large player (eg- Euronext.Liffe) then NYMEX/CME will eventually win the day.

 

[de123]

I like ICE except no market depth, so i now trade on globex.