Many traders prefer to focus on trading and may not have the time to research all of the nuances of exchange membership guidelines and fee incentive programs. Understanding which programs or memberships make sense for your style of trading can be a daunting task. While most of the futures exchanges have detailed information on their websites, it is difficult to wade through all of the text and make an informed decision. In addition, once you decide which programs apply to you, the process of applying for memberships can seem somewhat laborious.
Thankfully, Advantage Futures has an individual dedicated to help you through the process of applying to the various exchange memberships. Meet Margie DeLorme. Margie has been with Advantage since 2008 and has over 20 years industry experience. She works closely with our clients as well as the futures exchanges to help clients work through the exchange membership application process. Below, Margie answers the most commonly asked questions about Memberships and Incentive Programs.
Why would a trader inquire about membership options?
Exchange memberships enable clients to trade specific products at reduced clearing and exchange rates. Greater volume increases savings, so high frequency traders benefit from investigating the full scope of member status. Memberships may be purchased or leased. If traders cross-trade products at reduced clearing rates, memberships are needed at each exchange involved.
How do you facilitate the process?
I am available to consult with clients and prospective clients to help them determine the most beneficial membership(s) and incentive program(s). This can involve:
• Review of trading activity
• Assistance with application forms and accompaniments
• Act as a qualifying firm for membership ownership
• Negotiate seat lease agreements and the renewal process
• Coordinate the bid and offer process
• Liaise between client and bank to secure seat loans
• Process lease documents and monthly payments
If there are any issues, deficiencies in the application, or questions on account structure, the exchange contacts me and I work with the client to resolve the outstanding items. Once membership is approved, I secure and transfer seat information to the exchange and the discounted fees and rates are implemented.
Once an application is submitted, what is the timing?
The approval process for individual member applicants trading electronically is three to five business days. For an individual member applicant seeking floor access, the timing is two to four weeks which also includes registration with NFA and an orientation class with the exchange.
Corporate memberships are more involved and the approval process is six to twelve weeks, but could be longer.
What are the application fees associated with applying for membership?
The CME exchange application fee is currently $2,000. If a trader applies for multiple exchange memberships, the additional applications are discounted to $1,000 per exchange. Theses fees are paid directly to the exchange. There is no charge by Advantage as my assistance is a part of our client service.
What exchanges offer memberships?
The Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT ), New York Mercantile Exchange (NYMEX), Commodity Exchange, Inc. (COMEX) and Minneapolis Grain Exchange (MGEX) offer memberships. CBOE Futures Exchange (CFE) does not offer membership but does offer trading privileges.
If a client no longer uses their seat but does not want to sell, or has multiple seats, what options exist?
Leasing the seat is possible. I list client seats on the exchange website and facilitate the process when there is an interested party.
There is also client to client leasing. For example, one client has an extra seat and another does not want to purchase, I facilitate that agreement.
When would someone lease versus buy?
When a seat is purchased, the owner receives an equity member rate which is the most cost efficient. But each client situation is different. For some, leasing a seat better suits their financial standing and lease rates are more favorable than non-member rates.
Do all exchanges offer incentive programs?
Many exchanges offer trader incentive programs to enhance liquidity and broaden market participation. These programs enable individual traders and members to benefit from reduced exchange trading fees. Advantage monitors and oversees various fee and incentive programs. I am available to review and discuss various opportunities with clients to help them ensure they are receiving the most favorable trading fees.
For information on the programs, please contact me directly. I am always available to answer questions or assist with buying or leasing seats and the various incentive programs. I stay in close contact with the exchanges and up to date with changes to the programs. I can be reached at 312.800.7012 or mdelorme@ advantagefutures.com.