I want to know what transactions costs are.
In fact, I\’d like to know what transactions costs on a few contracts are.
Now, in detail, I don\’t really know all that much about futures and or options. But I need to find out a bit.
So, this applies to pretty much anything. Oil, currencies, interest rates, wheat. Would be nice to get information on a selection of them.
Now, here\’s what I need to know.
1) What\’s the nominal size of the contract? $1 million? $10 million? $100,000? This is the underlying nominal sum, not whatever premium might be paid for in the money, out of the money whatever. What\’s the actual contract size?
2) What\’s the bid/ask spread as a cost over the whole contract? That it\’s .45/.50 doesn\’t help me very much. I want to know what is the total cost of the bid/ask over the whole nominal sum of the contract? Is is $10 on $100,000? $90,000 on $1million? Obviously, I rather expect it to be more like the former.
3) What are the other transactions costs? Fee to the clearing house (yes, would prefer to be talking about exchange traded here), whatever other charges get dumped on it. These fees might be per contract or per transaction so make that clear: whether there\’s a $50 fee for a transaction or it\’s $50 for each contract in a transaction.
Now, the reason I want this info is because I\’ve been asked to do a paper on the FTT. And I\’ve also got (from a proponent of the FTT an estimate of the elasticity. How much should we expect volumes to decline as a result of an increase in costs? I know what the tax being proposed is: now what I need to know is what are current transaction costs so that I can see what we\’d expect the change in volume to be as a result of the tax.
And the tax applies to the gross nominal sum, the underlying, not any premium paid for a future or option. So that\’s why I need to know the transactions costs as a piece of the underlying nominal. What the premiums are just doesn\’t matter here.
So, anyone want to try giving me some real world numbers? I could of course go ask one of the exchanges but thought I\’d ask you guys first.