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Veteran Advisor

CFTC....useful as t**** on a boar

Sorry kids, have to call them as I see them

Remember they allowed non-reporting block

Trades...so exporters could have ,1

Single price while accumulation for

A sale....that was bad enough, having

S sale and a no, or later report...

Do much for "open market and price

Discovery"

We were told little if any market impact

Since it would be deferred months.

Thanks, to a 1 day article in this

Website, report issued...the trades

Were being used on NEARBY contracts.

So, there was business being done

Which SHOULD HAVE IMPACTED

The cash markets... Such as big

Sales, no reported or traded on.

I thought the market was for

Price discovery...not wink

And nod behind closed doors.

 

And who is in charge to police

The trade ????

 

Something to think about...how many

Of these block trades occur ?

 

 

 

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9 Replies
Senior Contributor

Re: CFTC....useful as t**** on a boar

I've have mentioned this dark pool. It has to be reported and does not show up on the charts. If you want to know how much is being traded in block trades, go to cme groups website and search for block trades. a little tough to navigate to which is the point but it can be found. I have not looked at it in awhile because I'm not sure what to do with the data.
This is new! It was just started in January and definitely affects price discovery! The whole point of it is to hide volume from the masses. This should be stopped completely, and is proof that big speculators are in control of our markets!
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Senior Contributor

Re: CFTC....useful as t**** on a boar

This was the last market without dark pools, but it's over now in regards to open price discovery. Every chance a big buyer has to hide volume he will use it.
I have noticed in the last few weeks watching corn trades that the market makers are refraining from posting anylarge bids on the level 2. Whatever they are doing in the market they are doing quietly!
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Veteran Advisor

Re: CFTC....useful as t**** on a boar

elcheapo,

 

I checked in with my favorite source in Chicago, regarding the block trading. Here is his response:

 

"Block trades happen mostly during index rolls.. so size traders in house trading with each other.. and it looks like large option traders trading with large market makers.. not sure this is a problem everything in line with futures.. and not that much  volume relative to a very liquid corn market..

from what i have seen the block trades are an attempt to avoid slip but are not getting a better deal per se to market quotes.. I assume they view the risk of slip and ease of execution as reason to execute size."

 

I hope this helps,

 

Mike

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Advisor

Re: CFTC....useful as t**** on a boar

Crooks
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Veteran Advisor

Re: CFTC....useful as t**** on a boar

True...but nobody here will admit it

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Senior Contributor

Re: CFTC....useful as t**** on a boar

Block trades should not be allowed on cme. The market should be transparent and all trades passed through the open market. This concept is used for one reason only, to hide volume! If the trader doesn't want the slip or change in the roll then don't roll. This started in January and should have never happened. If they are allowed then the buyer and seller should be identified as on the NYSE and Nasdaq with 8ks.
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Veteran Advisor

Re: CFTC....useful as t**** on a boar

90

You understand

I understand

 

The rest,  "" it don't matter""

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Senior Contributor

Re: CFTC....useful as t**** on a boar

Marketeye if there is no volume in block trades, and it's all in line with the futures, and price isn't affected, then blocktrades arent needed. There is no reason for them at all. So what's the point? Hmmm.
Senior Contributor

Re: CFTC....useful as t**** on a boar

I can't roll my position forward without being on the open market, so why should anyone else be able to. The whole point of market data is to determine true market value, and price discovery.

I mean let's face it, these markets aren't trading product, just paper. Number of contracts determine price, not product. So in a forward roll the trader creates demand for that supply of paper in that particular forward contract. The only way we can know that there is an increase in demand is by an increase in buying volume. How do we know that there is an increase in buying volume? By volume indicators on the charts.

Now we have large traders able hide their trades! it doesn't matter the reason for the trade, it is a trade!

Who are some of the big players that roll trades the first through the 9th of the month? Is it producers, commercial buyers, elevators, retail traders? NO, investment banks, and as you pointed out Market Makers. (Some do not believe in market makers in the commodities market but you said it I didn't. )

So basically our system of price discovery is being changed with new rules to the system by neither the needs of the producer or commercial buyer but by the needs of institutional traders and market makers which need to manipulate the market for profit, and in attempt to better control the commodities market as they already do in the stock markets. And of course when you ask someone at cbot they are going to tell us that it has no effect on price discovery.

Mark Douglas put it best when he said essentially in one of his trading classes that one trader no matter how small has an effect on the market and can have an effect on your trade. Like throwing a pebble in a pond it creates a ripple no matter how small it has an effect!