When the MF Global thing happened I knew there were going to be changes. After talking to owner of a big IB the other day, I sensed his need for overall stability. As in, this cannot ever happen again. I remember in 2008 many traders using their account as a bank. At that time we thought all accounts were safe up to an unlimited dollar amount. I know of several people who keep their family’s money just because it has always been safe there. I am talking millions and millions of dollars.
Of course that all changed. I, along with others, payed for that nativity.
First, I can say that the futures industry will continue. I do not know what changes will be made. It is still the most fair market in the world. HFT and algos have not taken over the market in the way it has with stocks. There are no rebates (exception being globex rebate for members) and it is a zero sum game. When you put on risk in futures you have exit risk there is only one way to get out. Fungibility is a great advantage in reducing costs.
There was tweet about the CME stock price is not a good sign for the futures market. That is like saying that because funereal stocks are down no one can die. Futures markets are integral in establishing prices. Imagine not know the price of something until you check out. You can’t eat stocks but you can use the CME products to eat and buy things. There has probably not been a time where fundamentals have strayed this far from price but that is true for many markets.
Obviously I am bias. The big issue we are facing and scares me the most is liquidity. Will any action the government take effect liquidity. Very possibly but many long time traders may use that to their advantage. But we aren’t there yet. The CME is the best at what it does.
As far as stocks price predicting anything in this environment, I will take the other side.
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