Future Closeout

[Preston]

Simon, give us a brief overview about what happens during future closeout and also the process that are undertaken?

[SimonPB]

you get rolled into next near dated contract and charged for one side of the transaction (rather than two sides, buy and sell)

[Preston]

You mean we still get charged for the "buy side" of the transcations for the roll over?

[SimonPB]

yip

[Preston]

Simon, this is one of the things that i do not agree with. Initial transcation is BUY, SELL, BUY(Rollover), SELL(Rollover). For a rollover it becomes a 3 legged transcations , i.e a BUY, BUY, SELL. Just my opinion.

[SimonPB]

I have no idea what you're saying .. fact is on roll over they sell Dec11 and buy Mar12 .. but only charge you for the one leg (sell or buy) ..

[Preston]

Thanks, i understand this now.

[WES]

the real problem actually is that they sell to the highest bid and buy from the highest offer, which mean that you have an indirect cost of the gap between the bid and the offers, it can be nasty.

[SimonPB]

lowest offer .. yip spread costs ..