Cme Group Inc. · NASDAQ:CME
Cme — CME Group Webinar III: Life Cycle of a Futures Trade (June 2013)
24 slides from Cme's conference presentation, Jun 18, 2013
Slide 1: Life Cycle of a Futures Trade
Life Cycle of a Futures Trade Paul Maggio Senior Vice President, Newedge USA June 18, 2013
Slide 2: Contents
Contents 1. Benefits of Futures Trading: The Exchange 2. Trade Flow: The Basics 3. Average Pricing System 4. A Futures/Option Trade: Day 1, 2 and 3 2
Slide 3: Benefits of Futures Trading
CME Regulation = Price Discovery Transparency Mark Netting to Market of Positions and Credit Risk Benefits of Futures Trading 3
Slide 4: Trade Flow: The Basics
Trade Flow: The Basics Client Newedge (FCM) Exchange / Clearing House Front Office Front Office Client places order Newedge sends order with Newedge. to the exchange Fill is confirmed Fill is assigned to to Client order Payment of margin call Allocation is sent from Client Back Back Office Top day O
Slide 5: Average Pricing System
Average Pricing System Allows Newedge to confirm to the client an average price when the customer receives multiple fill prices on one order or over a series of orders for the same product, same expiration month during a single trading day. Newedge may request that the exchange calculate the average
Slide 6: Asset = stock of wealth + price exposure
Asset = stock of wealth + price exposure Synthetic Asset = deposit + futures contract 6
Slide 7: Bloomberg Page WEIF <GO>
Bloomberg Page WEIF <GO> Source: Bloomberg 7
Slide 8: E-mini S&P Contract Description
E-mini S&P Contract Description Source: Bloomberg 8
Slide 9: Day One
Day One Newedge TEST FIRM NEWEDGE - TEST - 550 W. JACKSON , SUITE 400 CHICAGO, IL 60661 MI CLIENTE FAVORITO 123 MAIN ST CHICAGO, IL Detailed Statements Nenedge Updated on 10/15/2012 5:44:32PM GMT ocr 11, 2012 T DESK1 12433331 PAGE 1 a cOoNPF RMA T a ee THE FOLLOWING TRADES HAVE BEEN MADE THIS DAY FO
Slide 10: Day One
Day One On Oct 11, My Client made the following trade: • Buy 1 lot of Dec 12 Emini S&P 500 contracts at 1426.30 Based upon the day’s closing prices at the exchange, the client’s unrealized p&l is a gain of 105.00 USD The exchange initial margin requirement for the client’s position is 3,850 USD. My
Slide 11: Day Two
Day Two Newedge TEST FIRM NEWEDGE - TEST - 550 W. JACKSON , SUITE 400 CHICAGO, IL 60661 MI CLIENTE FAVORITO 123 MAIN ST CHICAGO, IL 2 Nenedge THE FOLLOWING JOURNAL ENTRIES HAVE BEEN POSTED TO YOUR ACCOUNT. TRADE SETTL AT TRADE SETTL AT LONG 10/11/2 10/11/2 us BEGINNING ACCOUNT BALANCE CASH JOURNALS
Slide 12: Day Two
Day Two On Oct 12, My Client wired in 3,756.16 USD to cover their margin call. Their unrealized p&l equals a cumulative loss of 240.00 USD. Since the client’s total equity does not cover the initial margin, there is a margin call of 345.00 USD. 12
Slide 13: Day Three
Day Three Newedge Newedge Detailed Statements Updated on 10/16/2012 8:25:26PM GMT TEST FIRM NEWEDGE - TEST - 550 W. JACKSON , SUITE 400 CHICAGO, IL 60661 ocr 15, 2012 MI CLIENTE FAVORITO 123 MAIN ST T DESK1 12433331 CHICAGO, IL PAGE 1 a ee ee a cONFIRMATION ee a THE FOLLOWING TRADES HAVE BEEN MADE T
Slide 14: Day Three
Day Three On Oct 15, My Client wired in 345.00 USD to meet their margin call. They also made the following trade: • Sell 1 lot of Dec 12 Emini S&P 500 contracts at 1430.50 The client has closed out their open position and realized a profit of 210.00 USD. The client’s cash balance at the beginning of
Slide 15: E-mini S&P Option Description
E-mini S&P Option Description Source: Bloomberg 15
Slide 16: Day One
MI CLIENTE FAVORITO 123 MAIN ST CHICAGO, IL 60661 6/07/32 6/07/3 u! us us EXCHANGE FEES S.E.C./ NFA FEES TOTAL COMMISSION AND FEES TOTAL OPTION PREMIUM ENDING ACCOUNT BALANCE TOTAL EQUITY WET MARKET VALUE OF OPTIONS NET LIQUIDATING VALUE INITIAL MARGIN REQUIREMENT MAINTENANCE MARGIN REQUIREMENT MARG
Slide 17: Option Trade - Day One
Option Trade - Day One On June 7th, My Client made the following trade: • Buy 1 lot of June 12 Emini S&P 500 1635 call at 9.60 Based upon the day’s closing prices at the exchange, the client’s unrealized p&l is a gain of 455.00 USD The exchange initial margin requirement for the client’s position is
Slide 18: Day Two
Day Two Newedge TEST FIRM NEWEDGE - TEST - 550 W. JACKSON , SUITE 400 CHICAGO, IL 60661 MI CLIENTE FAVORITO 123 MAIN ST CHICAGO, IL 60661 Detailed Statements Updated on 06/11/2013 2:5: THE FOLLOWING JOURNAL ENTRIES HAVE BEEN POSTED TO YOUR ACCOUNT. TRADE SETTL A‘ 6/07/3 6/07/3 us 1 BEGINNING ACCOUNT
Slide 19: Option Trade - Day Two
Option Trade - Day Two On June 10th, My Client wired in 490.57 USD to cover their margin call and pay for the option. Their unrealized p&l equals a cumulative gain of 494.43 USD. Option price today 985.00- premium cost 490.57= 494.43 (Not shown on the statement). Since the client’s total equity cove
Slide 20: Day Three
Day Three Newedge TEST FIRM NEWEDGE - TEST - 550 W. JACKSON , SUITE 400 CHICAGO, IL 60661 MI CLIENTE FAVORITO 123 MAIN ST CHICAGO, IL 60661 THE FOLLOWING TRADES HAVE BEEN MADE THIS DAY FOR YOUR ACCOUNT AND RISK. 6/11/3 6/11/3 us TRADE SETTL A’ BUY 6/07/3 6/07/3 us 6/11/3 6/11/3 us BEGINNING ACCOUNT
Slide 21: Option Trade – Day Three
Option Trade – Day Three On June 11th, My Client made the following trade: • Sell 1 lot of June 12 Emini S&P 500 1635 call at 14.00 The client has closed out their open position and realized a profit of 198.86 USD =(770.00-480.00 USD- commission of 21.14 USD). Ending cash balance available to withdr
Slide 22: Reporting Tools
Reporting Tools 22
Slide 23: Summary
Summary 1. Benefits of Futures Trading: The Exchange 2. Trade Flow: The Basics 3. Average Pricing System 4. A Futures/Option Trade: Day 1, 2 and 3 23
Slide 24: Contact
Contact Paul Maggio Senior Vice President Newedge USA +1 312 762 1090 paul.maggio@newedge.com 24
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