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- 24 January 2014
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Hello again people,
The last 10 pages have been interesting
Anyhoo:- MichaelID particularly ...
Please consider moving to the SPI ASAP. I won't claim any practical expertise with CFDs, because during the time I was trading futures, these guys were embryonic. Since then, the MF Global fiasco confirmed my initial view, which was that it's just plain wrong to have the settlement facility provided by the market maker in ANYTHING.
I view the CFD market as the equivalent of Cash Converters, compared to the SFE (now ASX, obviously) being the equivalent of the Reserve Bank. In that model, a futures broker occupies a status not unlike the institutional or corporate arm of CBA or Westpac or whatever.
A CFD Provider, as a market maker, values their offer on the basis of whatever they like:- much the same as Cash Converters will value your trumpet or guitar or family silverware. Competition means they will be more aggressive in CFDs, but the principle is the same.
The SFE doesn't value the SPI at all:- it leaves that to 3rd party market makers for some instruments, or to the pool of buyers and sellers for others {most of the time}.
An OTC CFD Provider settles your account only so long as it is able to do so from its own resources:- if it gets itself into trouble somehow {usually counterparty default or house trading}, you can stand in the queue to talk to the liquidator like everyone else.
That's the risk.
As for price, I used 25 SPI contracts as my "capital" and got a rate of less than $6/contract, many years ago. I can't recall how many trades I did annually, but it was in the hundreds, not the thousands. I wasn't a big player at all and had no cause to negotiate a particularly wonderful deal with my broker. Therefore, I assume this was about the going rate for a repeat customer:- perhaps one or two levels below the casual punter paying retail price.
That's the cost argument.
As for execution, I used the Marketcast feed, Prospecta for charting & data prep and LQuay was my broker. I suspect none of these exist anymore, sorry.
The main attraction at the time was the ability to trade [almost] 24x7. This eliminated the most annoying feature of the ASX (stocks OR derivatives) which was the gap between yesterday's close and today's open [day sessions]. The SPI overnight tracked a hybrid of the DAX/CAC, then the FTSE, and then the DJIA/NYSE/NASDAQ. The icing on the cake was that it also responded to major moves in CBOT/CME/LME and other commodity markets while the ASX was dormant. Essentially, it aggregated all these into a single number which was tradeable because it had liquidity up to 25 SPI contracts at all hours of our night, and integrity in pricing to within a few pips of the underlying instruments.
OK, this only worked well until about 2008, when a disconnect between our market and the rest of the world started to impact the model. However, I suspect {admittedly without any hard evidence} that as the rest of the world returns to something close to trend, the correlation between the ASX/SPI and everyone else is starting to re-assert itself. If that's true, then I reckon anyone who can meet the capital requirements of trading the SPI should do so in a heartbeat, and leave the CFD market to those who are thinking about graduating from Keno.
Snap
The last 10 pages have been interesting
And WHY doesn't this forum have multiple threads? Lord, it's a nightmare trying to follow the conversation when several people are trying to talk to several others about several different topics. Sigh.
Anyhoo:- MichaelID particularly ...
Please consider moving to the SPI ASAP. I won't claim any practical expertise with CFDs, because during the time I was trading futures, these guys were embryonic. Since then, the MF Global fiasco confirmed my initial view, which was that it's just plain wrong to have the settlement facility provided by the market maker in ANYTHING.
I view the CFD market as the equivalent of Cash Converters, compared to the SFE (now ASX, obviously) being the equivalent of the Reserve Bank. In that model, a futures broker occupies a status not unlike the institutional or corporate arm of CBA or Westpac or whatever.
A CFD Provider, as a market maker, values their offer on the basis of whatever they like:- much the same as Cash Converters will value your trumpet or guitar or family silverware. Competition means they will be more aggressive in CFDs, but the principle is the same.
The SFE doesn't value the SPI at all:- it leaves that to 3rd party market makers for some instruments, or to the pool of buyers and sellers for others {most of the time}.
An OTC CFD Provider settles your account only so long as it is able to do so from its own resources:- if it gets itself into trouble somehow {usually counterparty default or house trading}, you can stand in the queue to talk to the liquidator like everyone else.
That's the risk.
As for price, I used 25 SPI contracts as my "capital" and got a rate of less than $6/contract, many years ago. I can't recall how many trades I did annually, but it was in the hundreds, not the thousands. I wasn't a big player at all and had no cause to negotiate a particularly wonderful deal with my broker. Therefore, I assume this was about the going rate for a repeat customer:- perhaps one or two levels below the casual punter paying retail price.
That's the cost argument.
As for execution, I used the Marketcast feed, Prospecta for charting & data prep and LQuay was my broker. I suspect none of these exist anymore, sorry.
The main attraction at the time was the ability to trade [almost] 24x7. This eliminated the most annoying feature of the ASX (stocks OR derivatives) which was the gap between yesterday's close and today's open [day sessions]. The SPI overnight tracked a hybrid of the DAX/CAC, then the FTSE, and then the DJIA/NYSE/NASDAQ. The icing on the cake was that it also responded to major moves in CBOT/CME/LME and other commodity markets while the ASX was dormant. Essentially, it aggregated all these into a single number which was tradeable because it had liquidity up to 25 SPI contracts at all hours of our night, and integrity in pricing to within a few pips of the underlying instruments.
OK, this only worked well until about 2008, when a disconnect between our market and the rest of the world started to impact the model. However, I suspect {admittedly without any hard evidence} that as the rest of the world returns to something close to trend, the correlation between the ASX/SPI and everyone else is starting to re-assert itself. If that's true, then I reckon anyone who can meet the capital requirements of trading the SPI should do so in a heartbeat, and leave the CFD market to those who are thinking about graduating from Keno.
Snap