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EXPERT VIEW: Commitments of traders reports are not fit for purpose – Marex Spectron
October 30, 2013 - 16:16 GMT
commitment of traders
Amid expectations that the London Metal Exchange will produce its own commitments of traders (CoT) reports, Marex Spectron’s head of analytics sales, Vicky Sanders, cautions that such methods are no longer fit for purpose.
CoT reports were first produced as far back as 1924, and
went monthly in the 1960s. The move was proclaimed as "another
step forward in the policy of providing the public with current
and basic data on futures market operations". Over 50 years on,
and it’s a fair question to ask whether these
reports still carry the same merit, or whether financial
markets have passed them by. The reliance upon them as sources
of information, and the esteem in which they are held, seems to
emanate almost solely from historical practice. It is time to
assess whether market participants can continue to believe they
are well served by them. Financial markets have evolved
considerably and, we would argue, beyond this methodology.
Speed of delivery Even if the methodology were valid, the speed
of delivery is positively archaic. Markets now trade at the
speed of nanoseconds, which means that a weekly...
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