Euronext telling fairy tales
Just a little more than a week ago Euronext Liffe presented the outcome of the selection process of liquidity providers. This website even presented a wonderful graph with all firms and their number of roles. Also brought the news of the end of some classes of weekly stock options.
Well, turns out not all this information has been correct. Euronext made a couple of mistakes, forgetting market makers in weekly options and messing up the ING/INO liquidity provider (regular and old ING options go combined, usually).
Here’s the official explanation by Euronext Liffe:
“Due to reviewed calculations related to Member’s track record on which decisions have been based certain results have been updated.” (pdf)
Sorry, that smells like bullshit. Calculations have nothing to do with it. The overstaffed exchange has forgotten all market makers in certain classes (weekly KPN and PHI). Don’t worry about mistakes (we’re used to it), but take it like man and admit it. Maybe regular press (FD) will buy it, but traders don’t believe in fairy tales.
Raising fees
Small market makers such as GDT and Klinkenberg (yes FD, that’s how to spell their name) are outrageous after Euronext announced to double the fees of non-quoting traders. They have a point. Small traders can’t always take on responsibility for quoting, but they do add liquidity in some cases. With the current tight spreads, their fees are unreasonable high.
The other problem is the capped maximum costs of professional block trades. These trades, arranged by brokers between firms, were capped at 50 euro. This has been raised to 200 euro. That’s having a serious impact and there seems to be no economic justification.
The new reality hasn’t dawned yet on Euronext. Market spreads have come down because of competition. With the new contender TOM around the corner, all transaction prices will come down. There will be no possibility of compensating this with raising costs somewhere else. NYSE Euronext is the result of a political delicate multinational merger – with stakeholders protecting jobs everywhere. Next year we will see massive job cuts at Euronext. The alternative isn’t very attractive : folklore.
(Original PDF with errors here)
‘Sorry, that smells like bullshit. Calculations have nothing to do with it. The overstaffed exchange has forgotten all market makers in certain classes (weekly KPN and PHI). Don’t worry about mistakes (we’re used to it), but take it like man and admit it. ‘
It is of course bullshit, but buddy if you do a real world job, there are plenty of sub-par people who survive in mediocrity .. they just can’t accept their mistakes or call themselves stupid because of their inferiority complex .. it take confident intelligent person to accept and learn from his mistakes .. not some mediocre also ran stock exchange ..
‘The alternative isn’t very attractive : folklore.’
Euronext is not very different from situation in Euro land .. kicking the can down the road .. It was speculated if US is the new Japan, but its looking like Europe is the new Japan and Euro is the new Yen, there be 2 decades of recession and Euro will emerge lot stronger of it !
“Sorry, that smells like bullshit. Calculations have nothing to do with it. The overstaffed exchange has forgotten all market makers in certain classes (weekly KPN and PHI). Don’t worry about mistakes (we’re used to it), but take it like man and admit it.”
Dear Jack, it sounds like you are ready to join the reporters at FD (who cares about the facts he?). Euronext did make a mistake with something they call the quote quality score. This score measures the added value of each market maker and selection results depend on it. According to the exchange there was a failure in the system calculating the scores and because of that they needed to recalculate and refresh the results. You are right about the weeklies though. They forgot to include some companies. However, right after the first announcement there was an updated list on their website.
So, I guess you will take it like a man and admit you made a mistake…gosh what am I smelling?
@9:07
Are there any other mistakes apart from the weekly’s and the INO / ING stuff?
Does it matter if there are any more mistakes, don’t you have anything better to analyse?
@3:04
Well, if the only mistakes are forgetting the Weekly’s and INO/ING, then this calculation thing is missing the point..
The Euronext dude is basically admitting they messed up more than just that..
The dude is from Euronext, does it matter what someone from erstwhile dying company say,
Jack, how do we contact you if we have an interesting story?
Send your email to: jack@amsterdamtrader.com
‘The other problem is the capped maximum costs of professional block trades. These trades, arranged by brokers between firms, were capped at 50 euro. This has been raised to 200 euro.’
Jack, you are not good informed this time. Don’t just copy the FD. The 50 euro was including Clearnet. New fee cap is 200 + 10 = 210 euro. So even more expensive!
At a cap of 50 euros (plus a healthy fee for the broker) I made billions.
At 200 euros I still would have made 100 million.
At 210 euros I will have to throw in the towel.
Damn.