View Full Version : To expand on what Dr. Bill has written:

01-25-2002, 10:46 AM
To anyone who's spent more than a week on the floor of an exchange

the following would provide a good chuckle:

Dr. Bill wrote:

>One more thing and you will laugh at this as I did.If you are in the bond pits and you see an order clerk >signal the broker to buy say 1,000

>contracts at the market you are not suppossed to use that information to profit.

Two Quizzes to consider:

Quiz #1

It's January and you're in, say, the TBond pit.

The lead, and most heavily traded future, is MARCH.

You see that an Institutional Floor Broker is about to buy a 1,000 MARCH futures.

But you're standing where the JUNE futures are traded.

Some other Floor Broker XXX, standing next to you, has 20 JUNE futures to Sell.

Still another Floor Broker ZZZ, also standing next to you, has 20 JUNE futures to Buy.

Their respective bid and ask prices for JUNE are on the market

Would you?

A: Buy the offer in JUNEs from Floor Broker XXX.

B: Sell the Bid in JUNEs to Floor Broker ZZZ.

C: Do nothing.


Ok, that was too easy.


Quiz #2

You see that an Institutional Floor Broker is about to buy a 1,000 MARCH futures.

This time you're standing where they trade the MARCH futures.

You're standing next to some other

Floor Broker who has 20 MARCH futures to Sell, MARKET NOT HELD [1]

In the past few months you've had two OUT TRADES [2]

with this guy.

The Floor Broker will:

A: Try to get an extra 1/32 for his customer?

B: Quickly Sell them to you and let you make $600?


[1] MARKET NOT HELD: The customer wants the broker to use his discretion

[2] OUT TRADES: When an error has occurred the day before.

It could be an error in price, quantity, or, in the worse, case both sides

are buying, or both sides are selling and the market has moved against them.

Typically the Trader, or Market Maker, or Specialist absorbs any and all errors.

The Floor Broker nods, and the customer never knows or is bothered by any mistakes.

01-25-2002, 10:53 AM

01-25-2002, 11:14 AM
Timber Hill first came out with their electronic routing system not longer after the Dow 30 contract began trading on the CBOT. There was this CME deck handler who wanted to be an S&P local at the time.

So what he would do, when he moved a big order through his deck or saw a big order moving through, is call a retail broker a few blocks away. The retail broker would use his new electronic system to fire in a Dow future order to the CBOT for the CME S&P deck handler.

The Dow order would hit the CBOT broker at about the same moment the big S&P order hit the tape. The Timber Hill filler would get the last price before the Dow future followed the S&P.

I saw hime making like 8 or 12 points every time. Not long after, that fella became a CME local:)


01-25-2002, 11:19 AM
When you take the ethics test part of becoming a member of the CBOT I suggest you walk the straight

and narrow....and Erin as you know buying the Junes would also be a violation.And hey outrades happen!