10/04/2000
Implied Orders in General
Implied bids and offers are generated by the system based on individual contract or spread orders that have been entered into the system. For example, if someone places a spread order to buy heating oil and sell crude oil at a set differential, the system will automatically seek the best offer to sell heating oil and the best bid on crude oil and create an implied bid in heating oil and an implied offer in crude oil, based on the differential to the other market. To do this, the system examines the outright orders (orders directly entered into the system) and creates bids and offers that are implied by the combination of specific outright orders. The system then creates the "implied" bid or offer and displays it as an order that may be traded against. If a trader trades against this implied order, then the outright orders that combined to create the implied order will trade.
Two-Way Implication Between the Futures and the Spread Markets
Orders entered into a commodity’s outright futures market will combine to create implied spread orders both as calendar spreads and 1:1 inter-commodity spreads . The reverse is also true, i.e., orders entered into the calendar spread market or the 1:1 inter-commodity spread market can combine with other futures orders to create implied futures orders.
Implied Spread Orders Generated from Other Spread Orders
Implied spread orders can be created from the combination of other spread orders. For example, two separate calendar spread orders, one to buy a January contract and sell a February contract, and another to buy a February contract and sell a March contract, will create an implied order for a buy January/sell March spread. The system will also generate implied inter-commodity spread orders from the combination of calendar spread orders and other inter-commodity spread orders, and it will generate implied calendar spread orders from the combination of inter-commodity spread orders and other calendar spread orders.
Implied Order Creation and the Depth-of-Market
Implied orders will be displayed only if the implied order’s price is the best price in the market. Consequently, a particular market’s best price volume may be composed of outright volume, implied volume, or a combination of outright and implied volume. The depth-of-market view of a contract will only show this combination of implied and outright volume at the contract’s BEST bid and offer prices. Implied orders with prices that are NOT at the best price for a contract will NOT show in the depth-of-market view.
Please note that although the depth-of-market will not display volume from implied orders at prices other than the best, if a sweep order (an order to purchase a certain number of contracts within a predetermined price range) is entered with a price that would trade through the undisplayed implied order, the implied order will be filled.
Color Scheme to Distinguish Between Outright and Implied Orders
If the volume of the best bid or offer is due completely to outright orders, then the color will be displayed in BLACK font. If the volume of the best bid or offer is due completely to implied orders, then the color will be displayed in RED font. If the volume of the best bid or offer is a combination, then the color will be displayed in PURPLE font. (Warning: Do not change the Bid or Ask Color price cells –which is done in the
Cross Orders Must Be Turned Off
The current version of the implied functionality requires that cross order entry be turned off. Therefore, there is no ability to directly enter a cross order (a single order for a trade to be transacted for two customers accounts by the same broker) into the NYMEX ACCESS® system (This functionality is planned as a future enhancement). Orders should be entered in the order received from the customers. If you have two orders in hand that would normally be entered as a cross order, you should enter the order received first, wait ten seconds, and then enter the order received second.
Options Orders
This release does not support implied options orders in any options market.