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using this product. Now, the business gravitates to the firms that have the most expertise in certain product areas, where knowledgeable brokers can advise traders on the nuances of trading those products and provide the best service. This has the effect of shortening the business cycle. Information is disseminated more quickly. Instead of having to build physical trading pits and the physical infrastructure to support them, exchanges find out faster if a new product is a hit or miss. |
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The products we deal with that are less-known is really just a question of the level of sophistication and geographic location. Since we are a subsidiary of a global European bank headquartered in Chicago, we spend a great deal of time educating U.S. clients about European financial products. This includes larger exchanges, such as the LIFFE, EUREX and Matif, as well as smaller exchanges, such as the new Hanover Exchange and exchanges in Spain and Italy. In the last several months, we have become experts in Euro-conversion operations in the futures markets. We also end up acting as a Chicago futures market specialist to European, Latin American, and Pacific Rim clients. For example, January 3 was the first time you could trade the new Euro-FX futures on the CME's GLOBEX2 system. Everyone wanted to know the contract size, pricing convention, settlement process, and bid-ask spread. Our business is mainly centered around financial products. Traders want liquidity, speed of execution, low cost, and readily available news regarding the products. Products such as major debt instruments and stock-index futures contracts generally fall into this category. German Bunds, French Nationals, Nikkei futures, and Euromarks are a few that come to mind. Certain commodity trading advisors may only be interested in a product that trends well or has enough historical price data to meet the criteria of their trading system regardless of volume or open interest. So although a technical trader doesn't understand the fundamentals behind the three-month Euribor contract, dried red aduki beans, and the MSCI Taiwan Stock Index futures, they may work very well with his trading system. The fund managers that we deal with are using any product that fits into their portfolio |
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