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number-one issue for the board of directors of the two commodity exchanges in town is whether they are going to lose their captive audience to some third party. |
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That captive audience consists of FCMs and their user groups and the exchange floor people. For the most part, all the exchanges are meeting places. They also guarantee those trades. They guarantee all of the financial infrastructure on both sides. But if one side or the other decides to go play somewhere else, then the second group is going to be disenfranchised. This would happen, for example, if the sell side (FCNs and their user base) went to a third-party system and decided that they were going to play there because the liquidity was already bought. It's up to the exchanges to take the positive aspects that their membership offers and retool that so that this doesn't happen. |
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Look at what futures traders do: They take on inordinately large amounts of risk. They are gamblers, speculators, and risk-takers . . . liquidity providers. They provide for the other side of the marketplace, so that the exchanges thrive. That's a lot more risk than a typical options trader takes on in any given day. Options traders look for relationships and take a smaller amount of risk for their part. What I've been saying for months is that the exchanges are not going to take everyone in the S&P pit and turn them into options traders. But if you can take the people in the S&P pit and point out to them that there are relationships, that when they go on the screen, those relationships form their "leans," then you're more than halfway to saving your liquidity providers. |
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You already mentioned technical and fundamental relationships in terms of price points. These individuals who already have an understanding of this can learn some of the dynamics of relative pricing, then go on the screen. They bring risk tolerance to the table. This is part of the exchanges' asset base. |
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Neal: The only other way, then, to take your courses is to come to Chicago? |
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Tony: Not necessarily; our computers will travel. We deliver at least a few programs out of the country each year. In the past, |
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