The CME Group has modified their allocation method for distributing electronic order executions. This is simply the most fair and equitable marketplace in the world.
How many times have you bought the high or, sold the low on a stop or market order? My guess is that it's happened to you far more often than you've been able to buy the low or, sell the high. In the past, the reason for this has been the manual execution of orders in the open outcry markets on the trading floors of the various exchanges. Here's the way this process used to work:1) Your order is placed with your broker on the phone.2) Your commodity broker places the order with a phone clerk on the floor of the appropriate exchange.3) The phone clerk sends the order to the pit broker's clerk.4) The pit broker's clerk gives the order to the broker................That's the order placement part of the process......................1) The broker determines how many contracts he needs to buy or sell.2) The broker looks into the pit of 400+ traders to see where the market is trading.3) He rapidly deciphers the hand signals and noises to ascertain the best bids and offers at the prevailing moment.4) The broker decides that the best offer is coming from one guy---across the pit and looking the other way.5) Deciding that he is unable to get the opposite trader's attention, the broker sees a small trader near him willing to make the same offer.6) The broker makes the trade with the guy in front of him. The small trader waits for the guy across the pit to make his offer one tick better then buys the offer of the guy across the pit and pockets the profit of one tick X the number of contracts traded................That's the execution process.........................The broker tells his clerk who tells your broker's clerk so, your broker can then report the fill back to you.
Now, I ask the following questions:1) Is it fair that the small trader got to pocket the free money without taking the risk of actually "making a market?"2) Is it fair that the large trader got his trade done at a worse price while taking the risk of making the market?3) Is it fair that the customer got a worse fill because his clearing firm's broker couldn't get the attention of the large trader?4) Is it fair that the customer got a worse price and a delayed notification because the many links in the execution process?
Welcome to the Era of FREE TRADE!!!
The single greatest benefit of the electronic markets has been the equalization of customers, traders and brokers. The second greatest benefit of electronic markets has been the ELIMINATION of floor traders unwilling to make a market or forecast market direction or, in any other way earn a living through their intellectual abilities. ..........The electronic process............1) Anyone places a bid or offer at a specified price and number of contracts.2) The first bids and offers at a given price are the first ones executed. FIFO.3) Your computer tells you instantly that you have an execution.
If you would like to know the details of how the CME Group makes allowances for partial fills at a given price or, how it justifies a single contract's importance over a thousand lot, please read their announcement. Otherwise, take my word for it. We have the best system ever devised for true commodity trading price discovery. This is the epitome of fair trade!
