IMC investigated as DMM, again
IMC Financial Markets is accused of failing to maintain a fair and orderly market on the NYSE. The Designated Market Maker (DMM) may have messed up the closing auction of the stock Versum Materials (VSM). The stock is spun off from Air Products & Chemicals (APD). The market maker allowed the shares to spike in the closing auction.
Auction spike 9%
It was the first trading day of Versum Materials. Volume was high, because of ETF baskets rebalancing. Large cap ETF’s had to sell it, other ETF’s were forced to buy the stock. Slowly, the shares edged higher nearing the end of the day. The final auction at 16:05 spiked up with 9%. More than two dollars higher. From $25,63 to $28. The following day, the stock lost it’s ground again. See the featured graph on top.
Buyers blame IMC
Investors buying the stock at the close, cast the blame on IMC. The responsible market maker, again Don Himpele, should have done something to prevent the stock closing with a spike. He could have waited a bit longer, for sellers to appear in the auction. Or sell more stocks to take an overnight short position on his own book. Or maybe, he did a perfect job. NYSE is investigating.
The Man Who Took KKR’s Stock for a Ride
Don Himpele is famous for another auction. With the market turmoil of August 2015, he allowed KKR to open almost 50% lower than the previous close ($10 versus $19,55). “The man who took KKR’s stock for a ride”, wrote the Wall Street Journal. KKR considered getting rid of IMC. But they sticked stuck to theoretical considering, as IMC is still the market maker in KKR on big board.
For auctions on the same day in August 2015, JP Morgan Chase fired their market maker on the floor. KCG was shown the door, and they picked Virtu instead.
Human auctions give discussions
When a human market maker handles the auction, there will always be discussion. Human judgement isn’t flawless, and people make mistakes. The value added by a market maker on the floor is puzzling. Claims by NYSE about the benefits of their hybrid market model sound vague. There must be something good about DMM’s. Just haven’t found out yet.
Source : WSJ
sticked?
From fd.nl:
‘Of IMC hier goed of fout zit kan ik niet beoordelen’, zegt Martijn Rozemuller, oprichter van etf-bouwer ThinkETF’s en voormalig handelaar van handelshuis Optiver. ‘Maar als handelaar zijn dit lastige momenten, waarop vraag en aanbod erg uit balans kunnen zijn en je mogelijk een positie op eigen boek moet nemen. Zeker bij een veelgebruikte index als de S&P 500 geloof ik wel dat die onbalans gevolgen voor de slotveiling kan hebben.’ Ook in China loopt momenteel een onderzoek tegen IMC, dat vorig jaar augustus de fout in zou zijn gegaan bij de handel in termijncontracten
“Or IMC is I can not judge right or wrong here,” says Martijn Pink Muller, founder of etf builder ThinkETF and former merchant trading house Optiver. “But as a trader, these are difficult times, which demand can be very out of balance and you may have to take a position on its own book. Especially with a commonly used index like the S & P 500, I do believe that this imbalance can affect the closing auction. “Also in China currently under investigation by IMC, the error would have been August last year when trading futures
Is it 2016? Good old USA, sticking with antiquated methods that the rest of the world gave up on long ago.
I am guessing IMC can always pay their fine via a check? It’s very warm in NYC today, it’s 80 degrees while I drink my 45 ounce bucket of coffee. Gas prices rising too – nearly $3 a gallon in Jersey yesterday
Is there any source of finding out how much buy/sell rebalancing has to be done by ETFs? Not including the large indices (SPX/Russell/etc)
Never hear of the other current DMMs messing up. Leave it to IMC to screw the system. Where is the DOJ. NYSE will slap them with a silly fine and it will be business as usual.
Pathetic.
imc should have grown some balls and run a short position, but on the other hand this is simply supply vs demand.
imc has no balls
IMC has a new website and the Zug office is not mentioned. What’s going on?
The IMC Zug offices used to be called “Source Capital” but they have pretty much closed down since about a year ago.
No, Source Capital is a different company, they also moved to Amsterdam recently. Wait a moment, are you saying IMC and Source Capital jointly moved their offices to Amsterdam?
GTS, smaller than IMC, but more technologically advanced. And they don’t mess up.
http://finance.yahoo.com/news/berkshire-twitter-alibaba-common-040104542.html