NYSE Liffe opens market for liquidity providers

The liquidity provider licenses used to be a closed shop at NYSE Liffe. Once a firm was “primary market maker”, quoting all available options in a certain class, they usually could hold on their quoting position forever. These quoting licenses were limited, usually only 3 for smaller stocks to around 5 for the bigger ones as ING and RD. An interesting consequence were the traditional yearly play off for the licenses, like this one early 2013.

This time it’s different. Euronext Liffe apparently has found some capacity and from now on any market maker can be “primary market maker” wherever they like. More or less comparable with the Eurex model, where everyone can start quoting when they feel like it.

Just one play off

There’s just one play off this year, in SBM Offshore. The following six firms are competing for five available spots. Scrocca has performed better than the rest last year and is safe.

• All Options
• Webb (Caerus)
• IMC
• Nino
• Optiver
• 323 Trading

Ten full size market makers

Without the usual play off battles to announce, decided to have a look how many market makers firms are quoting on the Amsterdam market. According to this list there are 31 market makers in the derivative market. However, three firms operate with a double entity:

• Optiver uses Optra VOF and Optrix VOF
• Scrocca uses Scrocca Option Trading BV and Fluhalp Trading BV
• Webb Traders use Caerus II BV and Caerus III BV

This gives us 28 different market makers. Checking the full document who’s quoting what (warning, one complex matrix – requiring you to print it), and we can distinguish ten market makers :

1. All Options – quoting everything except large caps and index
2. Webb Traders – former Caerus, quoting all stock and index options
3. IMC – all large caps and index
4. Nino – all large caps, a few smaller stocks. No index.
5. Leopark – all index options including Daily and Weekly AEX. A dozen mixed stock options.
6. Optiver – all large caps and index
7. Susquehanna – everything, but mostly as CMM
8. Scrocca – almost everything as PMM, except for index. No daily or weekly index options.
9. Timber Hill – the fully automated firm part of IB is cmm in two dozen stock options and index. Weekly AEX, but no Daily’s.
10. 323 Trading – almost everything as PMM, except for index. No daily or weekly index options.

The other 18 firms are only active as trader in the index (where they could be big of course), or limit their classes to just a few stocks. InHouse is still doing AMG and AEX and there’s this French firm Mosaic active in Air France.

EXT folded

One of the firms missing this year on the list is EXT. Once started as one of the seven start ups from the ruins of Van der Moolen, the firm has shut its doors. Both former owners continue with Better Options. The mother firm in Hong Kong, AXT, has been liquidated earlier. This makes Webb Traders the only surviving VDM spin off on the continent.

Timber Hill joins TOM

Small news from TOM. The fully automated market making part of Interactive Brokers has been connected to TOM. This ain’t too spectacular news in itself, but this could imply Interactive Brokers may be connected to TOM. That would be a major shift in the derivative exchanges landscape. So far only founders Binck/Alex are connected with TOM, which isn’t a healthy situation.