Cash back on your trading - Incentives for active traders

You can get trading incentives credited to your account  if you maintain a certain level of open interest. In a simplified version, if you do the minimum required by the program by maintaining no less than 100 contracts in open interest for at least 20 days every month, you will be due incentive of $0.01 per contract. The calculations go by trade date and by calendar month; Starting from September 2019 a trader would be able to get even higher incentives for volume over 100 and 200K contracts respectively.

Qualifying for incentives

A trader will qualifying for trading incentives of $0.01 per contract if he/she trades 100 contracts or more, in one or more weather segments such as Rainfall, High/LowTemp, Landfall or Snowafall, for 20 or more days of each calendar month.

For example if a Trader trades 100 contracts each day for 20 days in December 2019 in Rain the trader will qualify for 20 x 100 x $0.01 = $20.00 in incentives, which will be credited usually by the 15th of the next month.

Another way to get the lowest level of incentives is to have trades in aggregate across multiple weather segments. An example of this would be a trader averaging no less than 40 contracts in Rainfall, 30 in High and 30 in low temp over 20 days of the month of December 2019 this would yield (40 +30+30)*$0.01*20=$20.00 in incentives.

For complete rules please check out the Exchange and Clearinghouse rules page and particularly the CX Rule XI-101. Daily Liquidity Incentive Program (“DLIP”)

Volume based Incentives for Active Traders

The incentives scale up as the trading volume increases, the $0.01 per contract incentive applies to all volume up to 100,000 contracts, meaning a trader could earn $1,000 this way. For volume between 101,000 and 200,000 contracts the incentive rate goes up to $0,015, meaning a trader reaching 200,000 contract mark in a month would earn a cumulative $2,500, and for volume from 201,000 to 300,000 the incentive rate increases to $0,02 meaning that a trader reaching the 300,000 contract level would earn $4,500 in incentives.

Fee Rebates

As indicated on the Fee Schedule section of the web site: “Per-contract precipitation and temperature fees will be rebated back at month-end for Participant positions covering 15 or more cities of at least 100 contracts per city that are taken at least 7 days prior to the Settlement Date. Standard fee rates apply to positions taken less than 7 days prior to settlement, to positions totaling less than 100 contracts per city, and to all positions if the above criteria are not met.”

Exchange Fees are important as they provide revenue and sustain the marketplace, but they can add up especially in the case of active traders. This is exactly what this program is here to address:

Example: If a trader places orders of 100 contract in 15 locations 7 days out he/she would need 100*15*$1,00 =$1,500 in funds allocation committed to positions for this date. In addition the trader would be charged $1,500*2%= $30 in exchange fees. Considering that this is an active trader who intends to trade at least 20 days that month the fees will add up to $30*20=$600.00. Fortunately as the rule is applied this trader can expect the $600.00 rebate credit back. This would allow an active trader to focus on strategy and better utilization of their available funds. It has to be noted though that this program only applies to trades done 7 days out. Fees on shorter date trades and strike swaps are non-refundable.

If the above is of interest, please reach out to to so we can discuss in detail.
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