Optiver fined $14 million in Hammergate
Finally. The CFTC and Optiver reached at settlement for the manipulation of oil prices in 2007. The firm didn’t do anything wrong at all, but is nevertheless very happy to pay 14 million in penalties.
Optiver has traded certain contracts which settle at the closing price (TAS contracts). The firm has manipulated this closing price with their specially designed piece of software, the Hammer. Smart name. But even worse than the name were their quotes on a taped line. My favorite shared wisdom in the legal files remains:
“You should milk it for right now because you never know how long it’s going to last”.
The key suspects have left the firm (fired). Christopher Dowson, Randal Meijer and Bastiaan van Kempen are banned anyway from trading commodities in the US for eight, four and two years. They couldn’t care less, I suppose.
Optiver on the other hand, is limited from trading in some contracts. Or can’t trade those TAS contracts anymore. The penalty is more or less the same as the provisions in their books.
Laffe straf! Dat kunnen ze persoonlijk nog aftikken als ze willen. Denk dat de champagne geopend is daar.
From what I understand, the Hammer isn’t actually the software that manipulates the market – the Hammer only gets them queue priority in the TAS earlier in the day, so that they can build up a position to “bully” the market during the close.
‘manipulate the market’ is the generic convenient jargon used by regulator etc to help normal/unknowledgable people to understand what optiver was doing, if i went to even some new derivative professional, they would be left scratching head if told that you can go long the derivative, short the underlying and at time of price determinition, cover underlying shorts and get higher prints to get out of your underlying hedge and much more importantly higher marks to settle your derivatives, its much easier to say market manipulation,
I think everyone agrees that they manipulated the market, but my point – and it is a slightly pedantic one – is that the Hammer was not a “specially designed piece of software” to “manipulate the closing price”.
The Hammer has many uses, most of which do not have anything to do with market manipulation.
how did hammer get them order priority and what other uses does it have ?
@2:49PM
yah absolutely brilliant, i’m sure no one here has ever thought of that. we’re not worthy of your trading insights.
lol, what’s your problem man, if you already know it, does that mean everyone knows it, even the guy who just started reading first chapter on derivatives, or are you one of those shit arsehole senior traders who like to keep all the knowledge to themselves so that junior traders are left second guessing everything?
yah i’m firmly in the latter category. lol, you sound like one of those juniors who doesn’t have a clue.
clue about what mate, that you got small ass dick and your sr trading ass about to be made redundant?
http://online.barrons.com/article/SB50001424052970203952604575552190237324972.html
This is from year and half ago really, but yah about time, when the prevalent paradigm with all the headhunters is that you need to have PhD in order to be trader, then its time to call the correction of this systematic trading market bubble, that sr trading arse can hide in his sr trading kingdom for a while longer,
“how did hammer get them order priority and what other uses does it have ?”
It fired as many orders per second as they could into the exchange during the opening milliseconds hoping to be first.
What other potential uses does Hammer software have?
http://www.quotenet.nl/quote-500/naheffing-van-32-miljoen-voor-optiver.php
I sure hope Optiver has negotiated a success fee with whoever’s been representing them.
Those who can read Dutch will enjoy the judgment in the case. you can read it on :http://zoeken.rechtspraak.nl/detailpage.aspx?ljn=BW3343&u_ljn=BW3343
The fun part starts in chapter 2 and gives a neat insight into Optiver’s performance in the years from 1986 to 2004, how the company’s structured and what the mechanism is by which they share the profits.
Jack, can you summarize and translate?
did i get this right, optiver would have to pay 32mil euros in back taxes?
Yup. That’s for the one year, it’ll be interesting to see what the bill will be for the subsequent years.
The other interesting question is: what’ll happen with the other market makers – this will apply to them as well.
Read the f-ing verdict. Different accounting standards already applied from 2001 and by that time other market makers were applying a theoretical valuation anyhow. So it only applies to 2000, when the tax agreement had been cancelled.
Sigh.
Correct me if I’m wrong, but any profit they made extra in the disputed year because of the difference in valuation would lower the profit in subsequent years, right? So even if they would have to pay 32 million over 2001 they’d have to pay less over subsequent years? Which would mean that the difference is only the interest for the time that the taxes have been postponed, and saying that it would cost them 32 million would be a gross exaggeration?
exact mechanics are hard to know, but this brings back to the discussion about difference between ‘real earnings’ and ‘earnings for tax calculation’
no it doesn’t, because the reported numbers that you read about on this site pertain to the commercial results, not those for the purpose of tax calculation. you didn’t read the verdict either. nice try though.
Can anyone post where I could get earnings for dutch companies from ?
Some previous posts have suggested going to the Dutch commerce registry ?
Do not mind paying for the copy but would just want to know if it can be downloaded from a site ?
Go to http://www.kvk.nl
http://exchanges.nyx.com/nl/nyse-euronext-amsterdam/lynx-verlaagt-tarieven-aandelentransacties
so what are earning numbers related to commercial results and what are the numbers used for tax calculation, I haven’t had much time to go through the report/verdict in details and google translate is only so good in translating legal records, kvk seems to have lot of details,
the commercial results are what you expect the records to be. meaning they did a realistic valuation of their entire portfolio. such calculations were also used for bonus purposes. for tax purposes, however, back in the ’90s optiver (and other mms) had an agreement with the tax man to the effect that they were allowed to value assets very conservatively (meaning lots of paper losses so less taxes due). basically depending on whether they were long / short, they were allowed to apply a low / high price for every kind of option individually. eg meaning that “riskless” conversions or reversals could yield big losses. such losses far exceeded the haircut calculations of optivers clearer. by the late ’90s the tax man had a better understanding of the actual risks involved in our business, the concept of hedging and the lesser need for such genereous valuations, so he exercised his right to cancel said agreement (year 2000). in the present day it’s no longer a relevant discussion. so when you read someone talking about how imc made xyz amount of money last year, it really is a fair representation of how much was made. you will even find the amount of bonuses paid in the commercial balance for the bigger companies, ruling out any discrepancies such as commercial vs fiscal (as if optiver would pay 50 million in bonuses on manipulated earnings of only 20m).
Does that mean we can believe the claim that this Hilgers guy is a billionaire?!?!
yes,
exact mechanics seem to be getting clearer, and this brings back the discussion about difference between ‘real earnings’ and ‘earnings for tax calculation’, suck it bitch,
then you must not have read the bottom third. don’t they teach kids to read in school back in the U.S. of A. anymore? ignorant yanks.
again, why do you keep giving an American moniker, and did you read the year of earnings for CV which started this discussion, lazy Europeans,
Lazy, ignorant, and socialist Europeans. They have no clue of the real world and are still living in the 18 century.
9:25am: get your thumb out of your ear and put it back in your butt. i´m explaining it for the last time: ALL of the reported numbers that you read about here, for optiver, imc, as well as those for curvalue (yes, even 1999-2001) were based on the “”commercial balance”” (public information). in layman´s terms: the real earnings, not the kind of manipulated numbers that optiver used in their “”tax balance”” (not public) that can indeed misrepresent the real deal as shown by the verdict.
oh and for the record, amsterdam is home to the most successfull and expert mm firms as celebrated on the website amsterdamtrader.com. i’m just repeating that because ignorant americans tend to think amsterdam is a country in socialist europe and its capital is called “”denmark””. it was the lazy dutch people who shaped the usa and its cities such as new amsterdam, or as you call it, “”new york city””
lol, the bloody racist duttchhie is getting upset, go find somebody new to hate in your country, first it were jews, then the east europeans, then the muslims, now its turn of south euoropeans to be hated out in hollande, viva la nederlandse, go to one of your women in windows, 50 euros, suck n fuck,
12.42, Laat je niet zo uit de tent lokken door zo een domme rukker.
Tibra europe just posted their results in the Uk house. Trading revenue from june 2010 to june 2011 was only 18 million. Profit was 1 mil.
This was post the greek downticks of april but included the japan earthquake and start of downticks of 2011.
here comes in the second dutchchie advising the first one to not throw stones when you live in glass homes,
if i got that correct, optiver made 400mil in that period and tibra made 20mil ?
The 20 mil could be revenue from only the uk operation in EU. They do have another operation in Amsterdam. Its possible that the revenue from that branch is not included in this filing.
This is result only from Tibra Europe and does not include the Australian results. They should be out pretty soon though.
“The 20 mil could be revenue from only the uk operation in EU. They do have another operation in Amsterdam. Its possible that the revenue from that branch is not included in this filing.”
The tax rate in Amsterdam is lower than the tax rate in the UK. You do the math.
come again, how does that maths work? i thought European taxes were higher than British taxes,
Nope. Go look it up.
The majority of the profit is attributed to the Amsterdam entity, while the United Kingdom only makes a nominal profit (see “Small Profits Rate”).
lol, global tax arb, once again, suck it bitch,
i see our american friend has woken up
say hi to my little friend,
The Trouble with Holland and Hollande,
Sell in May and Go Away?
@ April 28th, 2012 at 12:11 pm
Tough times for little Aussie.
how tough is it really, apparently people thought danny leaving aint a big deal, has he surfaced anywhere yet ?
http://www.bloomberg.com/video/90534749/
lol, no wonder these Americans have got the highest murder rate, didn’t they have enough of assault weapons that they need to weaponize the office supplies in their spare time,
Danny’s still hiding from the Russian mafia
what did he ever do to ruskis,
danny is still a shareholder in tibra. hes not allowed to surface anywhere until he sells his shares. when that happens, let the speculation begin!
no bid
its coming to winter season in aussie, he can burn his shares and keep warm