Eurex wins final against Eurex

0 comments / May 26, 2013

This weekend the annual Financial Football Tournament was organized again by Bennington. Usual place (FC Abcoude), usual good atmosphere and the usual strong teams from abroad. Not surprising, amidst weeks of rainy days the tournament was on a bright sunny day. We do God’s work, so it’s only fair he returns us the favor by sending some sunshine.

The final was played between Eurex UK and Eurex Frankfurt – and the Frankfurt branch won with a 3-0 score. The runner ups were the AFM and last year’s winner EEX (another member of the Eurex family).

Last year Scrocca reached the final. This year the market makers can be found in the lower half of the table, performing badly. Anyway, the worst team by far has been IMC – canceling their participation one day before the tournament. That’s really silly – if you can’t find nine players, invite some friends or hire some students.

IMC promised to participate next year. Other notable teams missing were Flow, 323 and ABN – rumor has it the rainy days curbed their enthusiasm. New entrants this year have been Webb, Tibra, and Coreal.

TOM to expand in Europe

1 comment / May 11, 2013

Interesting interview with The Order Machine’s CEO Willem Meijer this weekend in Het Parool. Although this newspaper is focused on Amsterdam, interviews like this would usually be published in Het Financiele Dagblad. Anyway, Meijer – with a new rebel look – has got something to say.

Things are going fine with TOM. The market share is increasing and next year Meijer expects to overtake Euronext in market share in the Dutch options. That may be a little too optimistic.

The market share in Daily AEX options has reached 40%. With a million contracts traded every month, TOM isn’t profitable yet. Meijer indirectly points at shareholder ABN AMRO, which still doesn’t route their order flow to TOM.

The infrastructure of TOM will move to London this month, and will be using a more advanced NASDAQ platform. It’s only a small step to expand abroad, and in 2014 TOM will open operations outside of The Netherlands. He mentions France, Belgium, England or Germany. It’s easy to launch new products, but the flow isn’t coming from thin air. Suppose TOM will try to get a partnership with foreign brokers, such as Interactive Brokers for starters.

While TOM will meet Euronext in court pretty soon, Meijer believes both exchanges should work together in the clearing and settlement. Just like in the USA. Would reduce costs for both of them, and there is an opportunity trades opened on TOM can be closed on Euronext. Or other way around.

Of course TOM is confident it will win the case against Euronext in court. Few years ago, Commerzbank won a similar case against Deutsche Börse. First hearing is scheduled on 3 June 2013.

Dutch Fleet in Economist

0 comments / May 1, 2013

The country turned orange this week with our new king. Not much too add, but reading the Economist today on the Dutch Fleet in electronic trading. Briefly mentioned the history of the Dutch exchange and the three most prominent Dutch trading firms. Not the latest edition, but from April 20. Here’s the link.

For market shares in the electronic trading the Economist editors take a look at the Scandinavian markets. Idea is probably from my article in September 2011 or – more likely – from this one, published one week later (coincidence, sure).

Anyway, interesting general story and comments from Defares and Elzinga in the Economist. However, no new developments or news – just some entertainment.

New trouble in AEX options

1 comment / April 25, 2013

The market in AEX index options on Euronext has always been a competitive battleground. Not in the same league as the Eurostoxx options, but still tight spreads and liquid markets. No wonder the exchange is defending it by raising legal barriers of entry for TOM.

In the meantime, there’s something wrong in the AEX for a few weeks now. Several market makers noticed a steep increase in losing trades on their quotes. One market maker suggests a new competitor in the pit with faster systems and lower latency is able to arbitrage less sophisticated traders. “In normal circumstances every liquidity provider was fast enough, now everyone is getting afraid to quote at all“.

Another trader points to Euronext. Given their track record with trading technology that doesn’t sound unlikely. Last week the all trading in the index was halted for few hours.

Both of them confirm the liquidity in the index options is declining, especially in the Daily options. “Even with the slightest move in the future, we’re getting arbitraged – doesn’t make sense for us to quote high delta strikes“. Reported problems are going on for three weeks now. Checked today, only five out of eight market makers keep their quotes in the market in the daily options.

A bigger fish in the market or an old-fashioned exchange? I would place my bets on the second guess.

Euronext sues TOM on AEX Options

1 comment / April 23, 2013

Didn’t arrive as a surprise. Euronext Liffe sues The Order Machine (TOM) for trademark infringements with respect to the options introduced on the AEX index. Euronext is the owner of the AEX index, and doesn’t allow other exchanges to introduce derivatives with AEX as underlying value. As of January 2013 the index options on AEX are open for trading on TOM. They have always known a lawsuit would follow. Press release (pdf).

There are a few possibilities. TOM could use some liquid AEX ETF as underlying instrument for their options. Another solution could be some reasonable fee to be paid to the old exchange. Apparently earlier negotiations on the matter between the exchanges didn’t work out, TOM expects better terms to be discussed in court. TOM knows what they’re doing. By the way, yesterday Nasdaq OMX finalized the purchase of the 25% stake in TOM (pdf).

Comments

Starting lawsuits are old reflexes from the former monopolist. Speaking of lawsuits, it’s has only been a month since I received some threats from law firms. IMC must have spent more on legal advice than this website’s total advertising revenue is per year (next time, I can guarantee the same result for half of the lawyer fee). As a result some posts and comments have been deleted, and open commenting is gone. A quick registration is required now – although you can remain as anonymous as you want.

Nieuwe Steen Investments Options (NSI)

Options on this troubled real estate company started this Tuesday. To everyone’s surprise, even three trading firms signed for primary market maker in this class. All Options, 323 Trading and Caerus will be the liquidity providers.

Amsterdamtrader