The effect of CME rule 552 on dual traders

Changes in the trading behavior of a selected group of Chicago Mercantile Exchange (CME) floor traders since the implementation of Rule 552 are examined. The analysis focuses on the customer order execution and personal trading of the traders most affected by Rule 552. The data comprise the records...

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Bibliographic Details
Published in:The journal of futures markets 1994-06, Vol.14 (4), p.493-510
Main Authors: Chang, Eric C., Locke, Peter R., Mann, Steven C.
Format: Article
Language:English
Subjects:
Commodity futures
Dealers
Futures
Futures trading
Regulation
Rules
Statistical analysis
Studies
U.S.A
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Summary:Changes in the trading behavior of a selected group of Chicago Mercantile Exchange (CME) floor traders since the implementation of Rule 552 are examined. The analysis focuses on the customer order execution and personal trading of the traders most affected by Rule 552. The data comprise the records of these floor traders' activities in all CME commodities for one year. The results point to significant changes in the trading behavior of dual traders. The results offer no support for the hypothesis that dual traders gain a greater share of customer order execution when their personal trading is restricted. There is also little evidence of a shift of personal trading to other commodities by the former dual traders. Also, personal trading in unrestricted expirations of these currencies is not used as an alternative for these dual traders. These results suggest that dual traders possess valuable skills and information related to the particular commodity they are trading.
ISSN:0270-7314
1096-9934
DOI:10.1002/fut.3990140409