Thursday, November 14, 2013

CME rates rising

When you control almost all future trading with no competing exchange and you are supposed to be a profit maximizing company, what do you think you will do with your pricing power? You will raise fees. Yes, anyone who has taken managerial economics 101 knows that you will raise your prices if you have new cost needs. You have network economies and a monopoly from the regulator, so the answer is obvious. This is the first increase in four years, but it shows it has pricing muscle. There are costs and needs for new technology, but all of those costs have to be borne by the traders.


FCM's are falling left and right and the CME is doing better. This does not seem like a very good market environment for increasing the cost of trading. .

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