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Oil price negative?


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Oil price negative?

  #211 (permalink)
 
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 SMCJB 
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futures trader View Post
Thanks for the CME photo, that is good evidence of their culpability.

I disagree. They explicitly documented the availability of negative pricing and the terms and conditions of the website specifically says they are under no obligation to update the Website.

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  #212 (permalink)
futures trader
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SMCJB View Post
I disagree. They explicitly documented the availability of negative pricing and the terms and conditions of the website specifically says they are under no obligation to update the Website.

Quoted from Terrence Duffy CEO of the CME:

“The small retail investors are somebody that we do not target. We go for professional participants in our marketplace. But at the same time, they need to make sure they understand the rules and it’s up to their futures commodity merchants to make sure every participant knows those rules,”

Did anybody here get a notification from their respective FCM regarding the potential for negative pricing prior to this event?

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  #213 (permalink)
 
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 SMCJB 
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I didn't but I also wouldn't expect to, FCMs don't set the rules, the exchange does. My FCM doesn't send me notifications of margin changes either. The exchange does. The announcements I expect from FCMs is for when they plan to diverge from Exchange Rules. For example if they are going to charge a premium to exchange margins or not allow trading in a contract. That is a decision the FCM makes.

I think Duffy's comment is actually out of place. They don't 'go for professional participants' they go for anybody. They like big traders because they trade more! If they don't want small traders why release the micro contracts? How many large institutional traders are trading a $15k Notional Equities contract?

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  #214 (permalink)
futures trader
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SMCJB View Post
I think Duffy's comment is actually out of place. They don't 'go for professional participants' they go for anybody. They like big traders because they trade more! If they don't want small traders why release the micro contracts? How many large institutional traders are trading a $15k Notional Equities contract?

He's running one of the largest casinos in the world, of course he wants everybody. He probably has performance metrics for his bonus structure as the CEO. But when a tour operator (FCM) brings in a group of people to gamble (retail customers) he wants the tour guide to be responsible for emanating the rules. And, oh by the way the rules change, and I may not have sent you a notice, and my website shows inaccurate contract specifications.

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  #215 (permalink)
 
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 SMCJB 
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futures trader View Post
He's running one of the largest casinos in the world, of course he wants everybody. He probably has performance metrics for his bonus structure as the CEO. But when a tour operator (FCM) brings in a group of people to gamble (retail customers) he wants the tour guide to be responsible for emanating the rules.

Two thoughts here.

The first is if it's casino why do you play. The odds in Casino's are stacked against you. Unless you have an edge you will lose.

Second is the deeper idea of speculation in the markets. Obviously the original need of the markets was for people who need to hedge to be able to hedge. Unfortunately it's unlikely a hedger needing to buy and one needing to sell both want to transact at the same time and at the same price. Hence the roll of the speculator. Providing liquidity to the hedger when he needs it at a price the speculator is comfortable at. But has the speculator become bigger than the market. I think in many/most/all cases yes. Speculation has become the game. Speculation drives the market. Is that good for the markets? If your a speculator maybe so but if you think markets should reflect fundamentals then maybe not. Question is how do you fix it. The idea that somebody with $77k in their account bought 200 futures contracts on penultimate is absolutely ludicrous. As is the idea that the Bank of China had 1000s of contracts in an ETF like structure on penultimate as well. The rules that are in place are supposed to stop this but they obviously don't. Maybe the exchanges should bring in day trading margins in addition to over night margins.


futures trader View Post
And, oh by the way the rules change, and I may not have sent you a notice

But they did. Multiple times. It was even discussed here on these forums over in the main crude thread. Serious professional traders knew prices could go negative.

futures trader View Post
and my website shows inaccurate contract specifications.

Somewhere between 'Debatable' and 'Disagree'. The contract specifications are correct - there is a specific contract specifications tab. The rulebook is correct. A single column on a live quotes page has a questionable meaning. Personally I've never seen the column highlighted in that photo but I pay for live data so have no need for delayed data. Even so I'm not sure what it means. There's lots of information on almost every website that is out of date or even inaccurate. That's why the website has a disclaimer that it might not be accurate. I will say this though, there is no disclaimer on the rulebook saying it might be inaccurate! Which raises the question @futures trader, have you ever read the rulebook?

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  #216 (permalink)
NotKenGriffin
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SMCJB View Post
Somewhere between 'Debatable' and 'Disagree'. The contract specifications are correct - there is a specific contract specifications tab. The rulebook is correct. A single column on a live quotes page has a questionable meaning. Personally I've never seen the column highlighted in that photo but I pay for live data so have no need for delayed data. Even so I'm not sure what it means. There's lots of information on almost every website that is out of date or even inaccurate. That's why the website has a disclaimer that it might not be accurate. I will say this though, there is no disclaimer on the rulebook saying it might be inaccurate! Which raises the question @futures trader, have you ever read the rulebook?


I can personally attest to incorrect documentation on an ICE product page once costing me money and there being absolutely no recourse.

I also disagree with some others categorizing this as a rule change. There was never a floor. Having a floor would be a potential recipe for disaster. What if we hit $0 and suddenly a bunch of speculators without physical capabilities couldn’t find any willing buyers before expiration?



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  #217 (permalink)
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NotKenGriffin View Post
Having a floor would be a potential recipe for disaster. What if we hit $0 and suddenly a bunch of speculators without physical capabilities couldn’t find any willing buyers before expiration?



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The problem was not that, it was specific to the cash settled markets the day prior to delivery. There was never any risk of delivery with the contracts that blew up with interactive brokers and other FCM's that got hit.

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  #218 (permalink)
NotKenGriffin
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futures trader View Post
The problem was not that, it was specific to the cash settled markets the day prior to delivery. There was never any risk of delivery with the contracts that blew up with interactive brokers and other FCM's that got hit.



You do realize the cash contracts settle against the official settlement price of the physical contract?


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  #219 (permalink)
futures trader
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NotKenGriffin View Post
You do realize the cash contracts settle against the official settlement price of the physical contract?


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Yes and delivery was at +9$ Nobody took delivery at -$37, the cash settled markets got crushed, set up like a bowling pin, knocked down.

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  #220 (permalink)
NotKenGriffin
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futures trader View Post
Yes and delivery was at +9$



Okay, what is your point? You want the financial contracts to have some special floor that the contract they settle against doesn’t?


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