Bid-ask spread tightens in option market
Before the outbreak of the crisis, the world of derivatives was as exciting as a the running episodes of Sesame Street. Some minor changes, but basically every day the same. Press releases could be copy-pasted from the previous month. Volume of traded options went up, and bid-ask spreads went down. This has all been ruined by the uninvited partycrasher called “the creditcrisis”.
However, there is a little surprise here. According to Alan van Griethuysen, director of Euronext’s derivative trading, the bid-ask spread of options have actually shrunk over the last year. With lower volume and higher volatility swings this sure sounds like an unexpected fairy tale. It may be true the spreads have become tighter on average, but he obviously didn’t mention the quote size. The size on the screens are probably lower than before, and the tradable size in the broker market has definitely left the building. So are the brokers, who are facing a difficult times.
Mr van Griethuysen cheered on the comeback of the small trading firms. Klinkenberg, 323 and Nino are mentioned in the papers, as well as the new primary market maker Tibra. Here’s another thing Van Griethuysen forgot to mention. The valuable liquidity providerships are slowly evolving into a commodity. All option classes started back in 2002 with only three primary market makers responsible for quoting all series. Right now new licenses are introduced every year and now six (or even seven) primary market makers exist in almost all stocks. Van Griethuysen has opened the door, and turns surprised when traders actually walk in.
are there any names of brokeroffices who are in trouble
Brokers try to execute trades on behalf of clients. Clients are gone. Brokers make no money. Not really a matter of trouble, just fixed costs.
ABAX Bank closed down their market making in Italy. 27% of the market last year and by far the largest single-stock market maker. There is still fertile ground left in Europe.
Saen’s fire sell to All Opties was an attempt to stop the business from going under
i believe Abax bank is still market maker in Italy…check your sources
Call the trading contact number listed on IDEM at ABAX a call and ask to speak to someone on the trading side, then ask me about my sources.
@30 april 1:16 ; Whole broker market is quiet. IWB, AFS, Aespen, TFS, Exane…
but these are just dutch brokers…. eurex volumes are up! maybe we should be looking at other european brokers
nothing to do on the exchange, so time for a new topic i would say.
I agree 😉
Any suggestions for new stories then?
VIX getting crushed in Chicago.
VDM management visited Real Madrid – Barcelona with a hired private jet
Dam… I’m working at the wrong company.
I wanted to go!
perhaps Jack (host of this website) has got a new topic??
i think a good story would be ‘is there a future for market makers’… or ‘how many market makers actually maket make, compared to being a vehicle to play tax games…’
belangrijke vraag: voor wie was management vdM: real of barcelona
Gezien hun trackrecord wat voorspellingen betreft zullen ze wel voor Real Madrid zijn geweest 😉
Guess they came to support Iván Zamorano. VDM is still living in the past..
they wont exist in 12 months from now
“they wont exist in 12 months from now”
Want to make a bet? Your size…
defensive!! obviously some truth in their troubles. i am looking for a price in the 1 guilder put…
at 0.45
at .30
(any size)