Most of this article went "whoosh" right past me, but it really struck me, not an investing novice by any means, just how little is commonly known about financial markets. The line about how "[t]he bond market dwarfs the stock market and ag futures market" was the catalyst. I mean, I knew this fact once but had forgotten it and in the context of the rest of the post, it was weird to realize just how ignorant I am.
Imo, the time to compete against the CME has long passed. Lutnick (Cantor Fitz) couldn't beat out the CBOT when it was a stand alone, open outcry exchange, then, EUREX then couldn't make it happen either.
If I were Lutnick, I would've opened the first cash Treasuries on margin exchange, with retail banking operations. I'm sure there's a need for those with deposits exceeding FDIC protection who'd like to pick from the immense menu of Treasury coupons to park their money, while knowing that those holdings are backstopped by the "full credit and faith" of Uncle Sam rather than the murky FDIC.
I don't agree that the time to compete has passed. I love that someone continually tries to compete with CME. Iron sharpens Iron and if no one competed, the Feds would have a good excuse to regulate more.
I remember trying to trade cash short term Treasuries from the middle of the Eurodollar Pit. (This was around 1999). We spent a lot of time and effort trying to figure it out, and even figured out where to put a cash treasury post inside the pit. Don Wilson blew a hole in the idea when he mentioned what the actual cash needs of a trader would be, and the haircut they'd take getting into and out of treasuries. That was the only meeting we had and Leo looked at me and we scrapped it.
I don't know how the cash market has changed or evolved since then, so don't know if that would be the way to do it or not.
Recall the TBTFs have "created" Treasury Futures exchanges somewhere between 4 to 6 times since, I think, 1988. All were busts, and a TON of dough was wasted trying to lure their traders "back inside the fence".
Most of this article went "whoosh" right past me, but it really struck me, not an investing novice by any means, just how little is commonly known about financial markets. The line about how "[t]he bond market dwarfs the stock market and ag futures market" was the catalyst. I mean, I knew this fact once but had forgotten it and in the context of the rest of the post, it was weird to realize just how ignorant I am.
Thanks. I learned something.
Imo, the time to compete against the CME has long passed. Lutnick (Cantor Fitz) couldn't beat out the CBOT when it was a stand alone, open outcry exchange, then, EUREX then couldn't make it happen either.
If I were Lutnick, I would've opened the first cash Treasuries on margin exchange, with retail banking operations. I'm sure there's a need for those with deposits exceeding FDIC protection who'd like to pick from the immense menu of Treasury coupons to park their money, while knowing that those holdings are backstopped by the "full credit and faith" of Uncle Sam rather than the murky FDIC.
I don't agree that the time to compete has passed. I love that someone continually tries to compete with CME. Iron sharpens Iron and if no one competed, the Feds would have a good excuse to regulate more.
I remember trying to trade cash short term Treasuries from the middle of the Eurodollar Pit. (This was around 1999). We spent a lot of time and effort trying to figure it out, and even figured out where to put a cash treasury post inside the pit. Don Wilson blew a hole in the idea when he mentioned what the actual cash needs of a trader would be, and the haircut they'd take getting into and out of treasuries. That was the only meeting we had and Leo looked at me and we scrapped it.
I don't know how the cash market has changed or evolved since then, so don't know if that would be the way to do it or not.
Recall the TBTFs have "created" Treasury Futures exchanges somewhere between 4 to 6 times since, I think, 1988. All were busts, and a TON of dough was wasted trying to lure their traders "back inside the fence".