TOM and the play offs
A small victory for The Order Machine / TOM. Conform all expectations, NYSE Euronext is forced to allow TOM as a member on their derivative exchange. Even Euronext saw the rain coming, and agreed to accept TOM as a member of the exchange. Didn’t even bother to wait for the court. The expensive legal procedures must have been some kind of delaying tactic or a warning sign to other contenders.
The keyword in this whole story is fungibility. Fungible contracts can be bought on one exchange and sold on another. Relevant matter for TOM.
On the very same day the new market maker licences at Euronext are auctioned. The primary market maker (pmm), competitive market maker (cmm) and extra competitive market maker (cmx) roles are divided again among the trading firms. Anyone can apply for cmm, but for more bandwidth the pmm roles are scarce.
Here’s the full sheet (pdf). A few play offs where firms are competing for the same PMM spot :
Ahold : Caerus, IMC, Optiver, 323
Aperam : Caerus, Nino
CSM : Caerus, 323 Trading
Fugro : Nino, 323 Trading
KPN : Caerus, 323 Trading
Randstad : Nino, 323 Trading
SBM Offshore : Nino, Leopark
Furthermore the overview suggests Caerus and IMC will battle for a cmm role in Unibail. This certainly can’t be true – there are enough vacant places in the Unibail crowd. Euronext is never very sharp on this kind of details. Speaking of vacant places. All Options is (still) the lonely trader in Unit 4, Mediq and from next week on also in the midcap index options AMX. IMC left the midcap options. Apparently these AMX options have failed to take off, unfortunately.
With lots of retail flow traded on TOM, the noble art of market making on Euronext is slowly losing importance. Anyway, this TOM should stop with using the words “search engine” in their communication (Dutch story, NRC). They don’t search at all – but keep everything on their own exchange as long as the price on Euronext isn’t better. TOM is completely ignoring the Dutch options on Eurex. Comparing prices, but not very good at it.
Quote 500
Next week the Dutch rich list will be published again. Sources say there will be more traders in the list than ever. Enough to write about next week.
Some questions:
1) If trader A buy an option from a MM on Euronext and sell it to trader B on TOM. Who will be the clearing house for this option? The clearing house of TOM or Euronext?
2) Is it possible that the TOM exchange demands on other margin for options than Euronext or is this also standardized?
3) If i’m right, broker Binck sends all options to his exchange TOM. The MM on this exchange will copy the bid-ask spread from Euronext.
If the bid-ask on both exchange are 0.10 – 0.20 and a retail order on Euronext appears for 0.18, are the MM on TOM obliged to copy this new unfavorable spread?
of je weer in de tijdmachine wilt stappen en thuis wilt komen
“If the bid-ask on both exchange are 0.10 – 0.20 …”
I’m surprised (as an outsider) how many market makers are active in the AEX options. More than 20.
I wonder what kind of “army of market makers” are active in the Eurostoxx 50 options, with more than 1 million contracts per day.
of je weer in de tijdmachine wilt stappen en thuis wilt komen
“If the bid-ask on both exchange are 0.10 – 0.20 …”
—
OTM aex options. 😉
1 million contracts a day is quite low for the product. The average volumes daily were 1.5 – 2. mill from 06 -10 on a normal day.
Crossing 3 mill a day on heavy volatility days.
Battle between fledgling options market and big brother
In the ongoing conflict between NYSE Euronext and newcomer TOM designate the court verdict tomorrow. But the conflict is far from over.
By Sanne Ruhaak
Rotterdam. Whoever wants new stock fully compete with existing grants, must be a member of the competitor. Tomorrow, the Court ruled Amsterdam or the American-European stock exchange NYSE Euronext giant young, alternative investment platform TOM unconditional membership option for its scholarship must provide. Thus, the battle between the small and giant TOM NYSE Euronext not be fought. Did you want to 2007 as a trader or investor in shares or options trading, you were appointed on NYSE Euronext. A truly competitive scholarship was not there. That changed in 2007 with the introduction of the MiFID. The new directive took the monopoly away from the traditional exchanges by demarkt open up testing for alternative platforms.
‘If the bid-ask on both exchange are 0.10 – 0.20 and a retail order on Euronext appears for 0.18, are the MM on TOM obliged to copy this new unfavorable spread?’
you must be truly high.
‘The MM on this exchange will copy the bid-ask spread from Euronext.’
the market is not tightening you moron, its only the execution which can’t be worse off than quote on the Euronext. Shows why you are retail punter on options more than likely to blow up, diming 20 mm at 18.
or you back into the time machine to steps and want to come home
“If the bid-ask on both exchange are 0.10 – 0.20 …”
‘I’m surprised (as an outsider) how many market makers are active in the AEX options. More than 20.’
well, its profitable, that’s why they are still there, einstein.
or you back into the time machine to steps and want to come home
“If the bid-ask on both exchange are 0.10 – 0.20 …”
–
Aex OTM options. 😉
Hey 11:13 – 1999 just called!
“the market is not tightening you moron, its only the execution which can’t be worse off than quote on the Euronext.”
=> Yes, the execution. And broker Binck sends all there option flows to TOM. So I repeat my question: if the market is 0.10 – 0.20 (this spread is just an EXAMPLE) and there is sitting a midprice order on euronext which i would like to buy on TOM. That’s not a favorable order (the midprice) for the MM on TOM, but he has to execute it. Am i right that he will sell it to me at TOM and (the MM) buy it back at Euronext? This imply a small loss for the MM because he sell and buy it back at the same price but pays a small exuction fee?
—
“well, its profitable, that’s why they are still there, einstein.”
=> Mister know it all. Obviously it is profitable. Thats not my point. The point is that an average of barely 40.000 contracts is profitable for more than 20 market makers firms. At that moment I just made me the objection what kind of number we can expect on the Eurostoxx with 1 – 2 million contracts.
Are Optra and Optrix, two optiver entities ?
‘there is sitting a midprice order on euronext’
yes, what is the liquidity providing policy on TOM? i would find it hard to believe that mm would match Euronext, it can easily be manipulated by putting aggressive offers in Euronext when you just really wanna buy at good executions on TOM. I think there is just a circuit breaker which doesn’t allow worse execution than tradeable size/price on Euronext, none of the matching/liquidity providing bs.
‘Are Optra and Optrix, two optiver entities ?’
yes, why?
‘Mister know it all’
No its actually, i know what i know and much more importantly, I try to know what i don’t know.
‘Obviously it is profitable. Thats not my point. The point is that an average of barely 40.000 contracts is profitable for more than 20 market makers firms. At that moment I just made me the objection what kind of number we can expect on the Eurostoxx with 1 – 2 million contracts’
okay, let’s do some rough comparison, how many people reside in dutchland vs EuroArea, while we are at it, why don’t you get some figures for S&P, so your mind can truly boggle on the number of market makers
***
By the end of the year, TOM will launch competing contracts on the AEX index of 25 leading shares on the Amsterdam Exchange, part of the NYSE Euronext stable of exchanges. Willem Meijer, TOM’s chief executive, told Financial News: “We are targeting a market share in the region of 50%.” The news follows a court victory last week that allows TOM unconditional broking access to the rival exchange.
***
http://www.efinancialnews.com/story/2012-10-29/tom-gears-up-for-a-bigger-slice-of-liffe#.UI5FJPmFM8o.twitter
TOM gears up for a bigger slice of Liffe
Tom Osborn
29 Oct 2012
The Order Machine, an alternative Dutch trading venue backed by several high-frequency trading firms, is to launch an attack on one of NYSE Liffe’s most popular index option contracts.
Anybody got the full article ?
HR is alway’s the big spoil
so thursday the new quote500 is gonna be out?!
HR is hygiene, there is little upside and possible downside.
tom
Jerry