Don't Worry About The NYSE: If The CBIP Fails, It's Time To Panic

The NYSE crashed and almost nobody noticed (for a few minutes) because market levels were stable (and because retail is long gone). Why? Because most trading these days is done via derivatives anyway on exchanges like the CME,  where one specific program may be the buyer of last reserve today: the CBIP.

What is the CBIP (first discused here)? Here is a reminder.

1. What is the Central Bank Incentive Program?

The Central Bank Incentive Program (“CBIP”) allows Qualified Participants to receive discounted fees for their proprietary trading of CME Group products. All trading activity under the CBIP must be conducted directly through accounts registered to the Qualified Participant or separate accounts managed by a third party on behalf of the Qualified Participant. Qualified Participants receive discounted fees on CME, CBOT, and NYMEX products and COMEX futures products for electronic trading only. Qualified Participant will receive discounted fees January 1, 2015 through December 31, 2015.

2. How does an applicant qualify for the CBIP?

To qualify for and become a participant in CBIP (a “Qualified Participant”), the applicant must:

  • Be a non-U.S. central bank, multilateral development bank, multilateral financial institution, sub-regional bank, aid coordination group, or an international organization of central banks
  • Complete a CBIP application and be approved by CME Group
  • Execute all trades in the Qualified Participant’s name
  • Register one or more portfolio managers
  • Have a relationship with a CME Group clearing member
  • Have authority to participate in a fee incentive program (i.e. no public or internal policies prohibit participation)

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Because if and when the central banks can no longer trade E-Minis with each other, we suggest you panic.