Niba Reports on Meeting With CME Group

It took a little bit of time for market participants to respond to the new exchange and data fees that CME Group first announced on Nov. 12 this year. While the exchange fee increase was pretty standard; on further review, the increase in data fees has the potential to significantly add cost to industry participants. This was first brought to light by a letter to industry participants by industry legend Les Rosenthal.

When the National Introducing Brokers Association (Niba) saw the potential impact of these fees, it sought comments from its members (some shared on the DCR) and a meeting with the CME to discuss their concerns.

Niba met with the CME Group market data team on Dec. 2. Here is their report to members on that meeting.

 

Dear NIBA Members:

 

Thank you for your comments and suggestions regarding the CME market data fee increase announced Nov. 12. Here is a summary of what was discussed at the Dec. 2 meeting with the CME market data team.

1. The size of the fee increase as announced -- $85 for each of the 4 exchanges per broker in your office, multiplied by every front end used, multiplied by each FCM you execute through.

2. New rules and best practices developed after the MF Global and PFG failures -- these rules essentially require brokers to use multiple platforms and/or FCMs as part of a good risk management strategy.

3. The definition of 'professional' vs. 'non-professional' trader as announced -- customers who have opened accounts as 'LLC' 'Trust' or another legal designation will be considered professional because they are not natural persons.

4. The chilling effect additional fees will have on hiring new APs.

5. Enforcement -- who does it and what additional costs will be incurred by FCMs, IBs and customers alike as a result of enforcing the new fees.

At the Dec. 2 meeting, CME staff stated that the new fee will be charged per front end, but not multiplied by each FCM. This will be clarified in another announcement to be issued by the CME as early as the coming week. Staff indicated they had heard most of the other points we raised and those were still being discussed by the exchange.

We were treated cordially. The NIBA is well-respected by the CME Group, and we're glad they agreed to clarify and re-consider various of your concerns. Our December 17 newsletter will focus on this issue and we hope the exchange has more information by that date. We encourage you to send your comments directly to the CME Group, marketdata@cmegroup.com and others at the exchange. Please contact any NIBA Executive Board member with your comments.

Best regards,

The NIBA Executive Committee -- Melinda: melinda@futuresrep.com; Steve: petillo@coquest.com; Mike: mikeb@highgroundtrading.com; Shane: shane@gate39media.com; Buck: buck@borncapital.com; Kristie: kaupperle@advance-trading.com; John: jjensen@hwfi.com

About the Author
Daniel P. Collins

Editor-in-Chief of Futures Magazine, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board of Trade and Chicago Mercantile Exchange. Dan joined Futures in 2001 and in 2005 he was promoted to Managing Editor, responsible for overseeing all the content that went into Futures and futuresmag.com. Dan’s incisive reporting and no-holds barred commentary places him among the most recognized national media figures covering futures, derivative trading and alternative investments.

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