Investors to sue Moscow Exchange over stoppage of WTI oil trading - page 11
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I will admit ALL my beliefs about the CC are wrong if a clause in the Exchange rules is found that the CC does NOT have the right to unilaterally open traders' positions (e.g. a buyer came in without a seller and he opened a position for him).
If a buyer comes in and places a market order for 1 futures contract and the CCP immediately sells the contract to him - he becomes his personal counterparty bypassing the REAL seller from the market. In such a case, the balance of the CCP's position and the buyer's balance will be inversely proportional and there will be no third party to balance whoever comes out on top.
If the CCP does NOT have the right to open a position with the trader unilaterally and waits for a third party with an opposing bid (from the trader's side), the CCP position will remain neutral. If he opens the trader's position with the expectation of a future appearance of his opposing party - he opens it unilaterally and becomes an interested party.
Therefore, the main question is whether the CC can open positions on traders' bids regardless of the existence of their actual counterparties (traders with opposing bids).
If it can, I am right, if not, I am wrong.
Peter, I used the translator. Read the above.
people, who knows what it is?
MICEX: TC time - 09:26:59; Attention! Deposit/write-off service is temporarily unavailable. We will inform you about its resumption.
We apologize for any inconvenience.
Clearing department.
Renat Akhtyamov:
...
1. A clearing house such as CME Clearing is an intermediary between buyers and sellers in the futures market. As intermediary or counterparty for each trade, CME Clearing acts as buyer for each seller and seller for each buyer for each trade.
2. By acting as the counterparty for each trade, CME Clearing helps you mitigate counterparty risk by maintaining a consistent book and risk-neutral position. You don't have to worry about the other end of your trade failing because CME Clearing is always on the other end.
...
It is clearly and understandably written. If one understands a little bit about market mechanics, one knows that there must be 2 persons in the market - a buyer and a seller - to open a deal. However, there are 3 persons in this market - the buyer, the seller and a certain CC, which (allegedly) insures traders against losses. Well, let's say... And this CC gets in between the buyers and sellers and opens a deal with each of them.
Hence: For each sellers' bid, the CC opens his own BUY bid (because he broke the seller-buyer bond and is now the seller and the buyer at the same time), and for each BUY bid exposes his own BUY bid.
The question is: Which came first, the chicken or the egg? -- In our context, the buy and sell orders from the CC to be arranged in advance in the market, so that buyers and sellers open positions immediately. So, he puts them both ways in advance -- he fills the market with liquidity so there's no downtime. It makes sense, doesn't it?
Once again: if we understand the market mechanics, then to this:CME Clearing acts as an intermediary or counterparty for each transaction as a buyer for each seller and as a seller for each buyer for each transaction. we have a legitimate question: "what if the number of sellers and buyers is not equal??" How is the balance of who comes out in the plus side covered? CC in his pocket, where does he get money for traders who are in the black? Where does it get the money for those who are on the plus side, if HE is their counterparty? From the money of those who are in deficit? And if they are 10 times less? Does he take the money out of his own pocket and pay them? Maybe he gives them market liquidity, so that the price can easily move in their direction?
A little understanding of market mechanics is enough to raise these questions, but I can't find clear answers to them yet... Maybe someone will find and share.
Another question: By what principles does a CC (or MM) allocate its liquidity in the market? After all, it is the proportions of liquidity that determines the ease or impossibility of price movements in one direction or another. Where is this explained?
In general, I have stated my views on the issue and the topic is closed for me. Now I am interested in another problematics. If you want, you may go on digging. I quit. "Seek and ye shall find" :)
What have you found and proven? The fact that the counterparty is an intermediary between the buyer and seller is common knowledge,
if there is no mediator, the price goes down and everyone sees it - what kind of fool would buy?
For example, you sold a paper at a price of 155 when the price was for someone and it is 25, you want to book a profit, so someone has to buy it and the market has stopped.
the answer is simple - call the counterparty to buy from you, push the price up and people will see an upward trend and buy the same price. the dealer will make some profit and sell the price up again until good news about the stock is released and people believe in it and a reversal begins.
What have you found and proven? The fact that the counterparty is an intermediary between the buyer and seller is common knowledge,
if there is no mediator, the price goes down and everyone sees it - what kind of fool would buy?
For example, you sold a paper at a price of 155 when the price was for someone and it is 25, you want to book a profit, so someone has to buy it and the market has stopped.
the answer is simple - call the counterparty to buy from you, push the price up and people will see an upward trend and buy the same price. the dealer will make some profit and sell the price up again until good news about the stock is released and people believe in it and a reversal begins.
The Exchange has refused
https://www.vedomosti.ru/finance/articles/2020/05/13/830197-moskovskaya-birzha
The Exchange has refused
https://www.vedomosti.ru/finance/articles/2020/05/13/830197-moskovskaya-birzha
Who would have thought...
Yes and the judges are nil in trading. All the more reason not to fiddle with the scruples.