FOWThe current markets make trading amazing. I predict the first quarter results of KCG, Virtu and Flow Traders will be spectacular. Shares of Optiver changed hands for €2000 – up from €1600 in 2015.

“Our firm is made for this kind of market”, said CEO Doug Cifu after the August 24 stock rout. And regretted his remark immediately. Investors can’t stand it when a HFT CEO is trumpeting how much money they made, when regular investors lose. Anyway, this year that kind of market has been going on for weeks.

Enough to talk about. How convenient, the FOW Amsterdam event is coming up shortly. On March 10th, to be specific. Just like last year the location is Amsterdam Hilton. After a long day of interesting discussions, there will be an equally interesting gala diner and drinks.

See here for the list of speakers and topics. There are interesting speakers I’m looking forward to hear. Attendants will be folks from every relevant firm in the business. FOW made a list of firms sending delegates to last year’s edition. I hope the company names on the name badges will be without those errors.

Other small news

Virtu missed estimates on currencies

Virtu’s stock dropped on their full year figures. Especially currency trading disappointed. Volume in the  trading dropped, but there’s more going on in the market.

The “last look” function at bank’s FX trading desks is under pressure. In short, last look means a bank has the right to refuse execution. A bank quotes a market, gets hit on their quote and can then wait for a brief moment to confirm the execution (price moved favourable for them) or deny it (client was right).

You don’t need to be a rocket scientist to see what an awful deal this is. Regulators are slowly stepping in. Banks need to publish accept/refuse ratio’s. Smart and fast traders like Virtu get a lot of last look rejections. To save the ratio, banks ditch the smart clients. This way banks can maintain they hardly use last look. They only serve clients without an edge in the market.

Here Virtu is hurt – while they can use last look themselves too (yes, complicated market). In five years last look will probably be gone.

TOM released new Markit report

TOM released the Markit report of best prices in option market over January. More on this later. A few more detailed things can be said about it.

HiQ lost 12% in January

HiQ Invest market neutral fund lost around 12% in January. That’s unusual for a market neutral fund. Seems to be a common issue for DeGiro’s sister. Given their long beta, the first two weeks of February may be interesting to follow next week.

Binck missed estimates

Binck figures missed estimates. Especially the number of transactions where below expectations. Probably DeGiro is gaining some active customers from Binck. Another issue seems to be their Belgium unit. The speculatietaks (speculation tax) is hurting them. Clients stop trading or move abroad. Unaudited figures from DeGiro have been released too : pdf.

Speculatietaks on rights issues

The speculatietaks has been introduced per 2016 in Belgium. Ignoring losses, taxing only winning components. Unique in the world. There is more.

In case of a rights offering, you buy extra shares at a discount. The tax authorities in Belgium see this discount as a purchase price. Ignoring the fact you actually paid for the discount. This tax is not making any sense. It never did, but it’s getting worse every month.

Jack