TOM is confused
The joint venture of online retailbroker Binck and trading firm Optiver has changed plans. The new chief Willem Meijer isn’t afraid to admit the whole plan initially was intended to channel Binck’s retail flow into the books of Optiver with TOM, which stands for The Optiver Machine. The reason for this sudden turn-around isn’t quite clear. Could be the financial watchdog and the rest of the market gave them an off-the-record red stop sign. The ethical standards of Optiver isn’t something many people rely on.
The new plans
Anyway, it’s time for something completely different now. Something difficult, as the new CEO has got a hard time explaining the new plan. It sounds like a hybrid version of the old plan mixed with plans for a new exchange. The final product is so complicated it can’t be explained yet, nor any details could be given. It should be very simple:
- A) Binck is creating an in-house matching system, with Optiver matching all Binck’s retail flow
- B) Binck is creating a completely new trading platform, with Optiver as the first committed liquidity provider
These options don’t mix. Building a new stocktrading exchange is a piece of cake compared with a new option trading platform. The questions marks on clearing, matching, margin and open interest must give a serious headache. Nevertheless, the chief Willem Meijer is an optimist. Trading in options on his new trading platform will start this year, and with some luck even before the summer. That’s definitely not going to happen.
Stock trading
Creating another stock trading exchange can be done. When Binck’s retail flow is routed to the exchange with the best offer, it will be a tremendous challenge to compete with the combined bid-ask spread on Chi-X, Euronext, Bats and Xetra. Again mister Meijer doesn’t seem to get the point. It’s not Binck’s decision where to route the orders, it’s the best price on the market which is king. It’s not like opening a shop with guaranteed customers.
Small option market makers
For the purpose of maintaining a competitive and healthy market with many participants, the small market makers can’t be missed. The small market makers Calimero, Munnik and Klinkenberg announced their concerns with a new option trading platform. Connection expenses, hardware investments and software upgrades are absolutely necessary to join trading on TOM. Their concerns are very reasonable and justified ; the developments are seriously threatening their very existence.
Dowson is sitting armed with his hammer just waiting to make money out of your orders.
@ 10:47
Hear hear 😉
(this is the famous "special assignment" at home)
Do these small option market makers really add that much value? If you have a market with Optiver, IMC, All (and maybe timberhill) I do not think these small firms add that much extra.
TOM is gonna be a 'cool new party'.
And as with all party's, you've got to buy a ticket to attend!
Who needs Calimero? I can't recall them ever providing any liquidity.
liquidity providing in eggshells perhaps 😉
Noboddy cares about these small companies. The things that I am worried about are:
1. best execution = not best price. MiFid requires best efforts for orderrouting and not the best price!! If an order trough the TOM system is 0.00001 sec. faster than via Euronext, the order goes via TOM…..even if Euronext has a better price.
2. All these issues can't be controlled by AFM or other regulators. At the moment it is not possible to require overviews with all the prices at any moment. So how knows a customer if his order is executed at the best price?
3. The customer loses his time-advantage. A customer who is offering for 2 weeks 0.50 in a certain option does not do the trade if a Binck customer has a 0.50 bid. Instead of the 2-week-risk-taking customer….Optiver does the trade!
4. What does TOM do with corporate actions?
5. What if I am short an Euronext option an long a TOM option…..and TOM goes bankrupt?
6. Why a 2 year time advantage for TOM?? So Optiver can see and learn about the order flow?
7. How many options exchanges do you want?? In the view of last year, I think transparancy is required….and not something like TOM.
8. Euronext has allready taken legal actions against TOM…….so let's hope that AFM / Wouter Bos are smart enough to deny TOM an option exchange
Euronext should bann Optiver from their trading platform if Optiver continues with TOM !!!!
Lot of BS…
Looks like the new TOM is gonna be a similar platform as Chi-X, but then for options as well.
People who are still complaining just don't want to do any IT-investments.
Who needs the 'big' marketmakers?
I do!
@Feb 3 11:13
Try to react on the issues as mentioned above 10:11!! In all these complaints investments in IT weren't even mentioned!
Anonymous said…
I do!
Because you are too shitty to take the risks and the profit for yourself!
dude… I AM an employee of one of the bigger marketmakers 😉
Well you're an idiot because you didn't understand what the guy in the previous comment was trying to say…clown.
very funny
I just think that Optiver's move is very clever. I think "regular" market-making is very difficult now, and every proper trading house should do the same. Without external flow, either your PL is caped, if you are good, or you simply don't make money. And don't forget that "human" market making is also reaching its end. All in all, TOM is just the start of a new Optiver, a fully automated market making house, just like Timber Hill
Correct. The move really benefits Optiver.
How many options exchanges do u want??
There's no way that the retail public will benefit from TOM. The only motivation of Optiver is bringing down Euronext fees and Binck receives in return money from Optiver.
Like to see the faces of AFM / DNB if they have to control & regulate for example 8 option exchanges!
you're right… lets get rid of Turquoise, BATS and Chi-X so Euronext can higher it's fees again.
And Binck will not receive any money from Optiver because TOM is a separate entity.
This is why I'm leaving Binck for IB, instead of innovating their trading platform, they invest in best prices for retail customers who don't even benefit from € 0,002 price changes
Leaving Alex too for IB. Completely agree with the mentioned points 3 feb 10:11
Anonymous said….
Long live BinckBank!
For me it's the best broker on the market!
BinckBank should start their own TV channel for investors (based on Wayne's World theme) – "Binckbank, party time, excelleeent! Yeh!"
Binck will execute all orders voor SNS Bank!
All retail flow of SNS will go to Optiver! I cannot understand that SNS allows that their customers orders will be executed according to "best execution" instead of "best price"!
Back-handers – some hand shakes done in back rooms. Not best for market, for investors – it's amazing this is allowed to happen