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Trading pit history

15 comments / November 27, 2012

I guess you may remember the interesting documentary about close of the open outcry trading in Amsterdam, zooming in on a few traders. Unfortunately without English subtitles,  due to lack of budget according to filmmaker Edwin Trommelen. He says hi from Kyrgyzstan. Subtitles would be 2000 euros. Still possible.

Pit culture

Even without subtitles, someone happy with the result is a Chicago trader, Ryan Carlson (on the picture). Having worked on exchanges in Chicago, Kansas and New York – he’s more or less collecting footage from the pit over the ages. Nostalgia indeed, but not someone living in the past.

A nice anecdote about Amsterdam. He once run into the exchange building in Amsterdam on holiday, by accident. The bar, the red light district and coffee shops in the close vicinity of the exchange made a lasting impression:

Gotta hand it to the Dutch, they’re really disciplined and it’s little wonder why the various prop firms which originated at the Amsterdam Exchange dominate a lot of trading worldwide now.  I could only imagine how quick a setup would’ve killed off the population of any other trading floor.

Trading pit history

Read it on Trading Pit History. Apart from collecting random bits of history and artifacts from open outcry futures pit trading, he has created a massive archive of hand signals from the pit. Quantities, months, years, contracts and participants ; it’s all there in different dialects for CBOT, CME, LIFFE, MATIF, NYMEX and SIMEX. Skip the numbers, head straight to the participants. The signal on the picture here is easy. Deutsche Bank.

Exit through the gift shop

I see entertaining television game format potential in his signals. Exit through the gift shop. Some hand signal boards in print for sale. He still has to recover some cash from his account at MF Global.

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Good start for Maven

138 comments / November 18, 2012

Maven entered the building in September 2011. The London based firm was founded by former traders from two known market makers. Some came from Optiver directly (Ivan Koedjikov), others have spent some time at Tibra before leaving for Maven (Ben Huda, Ian Toon). It’s a small world, and as far as I can see it’s a small company too. The financial report notes a staff of four people. That’s an average, starting with zero employees and ending with eight.

Maven Trading is active on the cash market and as a market maker, also active in the AEX index options. In their first year, the revenues have been 4,5 million pound and a profit of 2,2 million. That’s pretty decent in the first year. The salaries have been 1,4 million.

Interesting to see such impressive results with such a small company. Firm is using Actant for trading.

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Risk management fraud at Binck

25 comments / November 14, 2012

This morning the Financieele Dagblad brought the frontpage news of Binck firing most of their risk managers. Five out of eight risk managers were shown the door, including the head of the department. They have allegedly broken some risk rules. Some of them have been working for the firm for over a decade ; that’s even before the full take over by AOT in 2004.

What did they do

Not really clear. FD reports the folks have been building up some riskless option positions, selling millions of option premium.  In some cases more than 2 million euro. The money was sheltered on a savings account at the bank. Profits amounted approximately a few tens of thousands. Bank lost because of an interest spread. Interesting stuff, journalists may not always connect the dots in derivatives – but these facts don’t sound like fiction.

Intraday trading violation

Employees also violated a certain intraday trading rule ; at some banks you can’t buy and sell the same security within 24 hours. This silly rule should block staff from frontrunning on customer orders. In reality they wouldn’t have the time to frontrun any order at all. Customers’ trade executions are within split seconds. No human could be fast enough. And second, those retail orders aren’t moving markets anyway. Market makers would love to see the retail order flow coming. Not to frontrun, but to trade against them.

In the afternoon the Binck spokesman pointed to the intraday trading violations. Really, no lower staff would be fired for breaking such petty rules. There’s no real benefit for them, no one would be harmed and a small penalty would do.

Reverse engineering

So, reverse engineering the situation at Binck. My best guess is the risk managers sold some deep in-the-money options on the AEX index. Somehow they have been able to circumvent the margin requirements and draw some interest at a savings account. A few dozen box spreads would generate millions of option premium. And millions of option premium would generate a few thousand euros if you can find a decent savings account rate. The margin requirements are fixed by the clearing, maybe long options can offset those margins. Anyway, risk managers should know the procedures. Interest arbitrage against your own employer, would be serious robbery.

Update

Here’s the full press release confirming the sack of five employees. Link.

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Curvalue.nl for sale

48 comments / November 6, 2012

Short commercial break from our bargain basement. As good as new, second hand domain name for sale. Curvalue.nl is put up for sale at eBay. Somehow a former IT manager at Van der Moolen managed to leave the sinking ship with a domain name in his pocket. And an ugly piece of piece of porcelain.

The seller is a an optimist, but who knows.

 

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Duyfken sails into Quote 500

56 comments / October 31, 2012

This Thursday in the stores in the country, the Dutch rich list Quote 500 edition 2012 is out again. The millionaires from the trading floor have my very special attention – and I’m glad to say there’s something new to share apart from the usual suspects.

Beside the top 500, the Quote research team has made lists of fat cats per region – lowering the bar. And that’s where we find the new names, mainly from Duyfken trading (who?) and Binck.

First things first. The usual suspects, grouped by trading firm.

IMC
Rob Defares                                €300       +50%
Wiet Pot                                      €310       +29,2% (a lot of Goldman Sachs cash)
Rene Schelvis                             €57         +1,8%

Optiver
Leo van den Berg                       €94         +4,4%
Johann Kaemingk                      €380       +26,7%
Ruud Vlek                                   €120       +25%
Jan Dobber                                 €91         +9,6%
Chris Oomen                               €125       +25%

Flow Traders
Roger Hodenius                         €75         +15,4%
Jan van Kuijk                              €90         +20%

Other
Allard Jakobs                             €180       -10% (All Options)
Jurjen & Hugo Kruisinga          €120       -4,0% (Cross Options)
David Slager                               €150       -44,4% (hedge fund Atticus)
Adri Strating                              €145       -6,5% (stock trading in the stone age)
Alexander Roepers                    €600     (new)  (hedge fund Atlantic Partners)

With All Options as a tiny market maker unable to compete in the main stocks and index, Allard Jakobs’ fortune looks overestimated – but sources assure me the money is all there. Cash. Maybe his teak investments made a killing. Alexander Roepers, 54 years old, is new on the list. It’s not a typo – the researchers have overlooked the guy for years. IMC had a great year, and Rob Defares made a great jump in his net worth. For more details check out last year’s overview or the list in 2010.

As mentioned, the mini lists for some regions have some interesting names. Not fat enough to reach the first 500, but rich enough for some attention.

Duyfken Trading Knowledge
Dennis Brinke (42jr)         €40  Regio Gooi/Utrecht
Reindert Stoffer (42jr)     €40  Regio Groot Amsterdam
Stijn Boon (41jr)                €30 Regio Groot Amsterdam
Serge Erkens (41jr)            €30 Regio Groot Amsterdam

Binck
Thierry Schaap (41jr)        €20 Regio Gooi/Utrecht
Kalo Bagijn (40jr)              €20 Regio Groot Amsterdam

Other
Jan Kluft (68jr) Delta/Paerel            €40
Bert Smit (65jr) ExtraClearing/Stroeve   €40
Ronald van der Geest (45jr) FlowTraders  €35
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Everyone knows Binck and their founders. The other firms (Paerel, Stroeve) will ring a bell too. On the other side there’s Duyfken Trading Knowledge. Founded in 2002, a headcount of around twenty and a strong academic background – mainly in physics. Keyword is “econophysics”. Sponsoring an econophysics department at the university of Leiden (link, Dutch). Duyfken, named after a VOC ship, is apparently highly profitable and highly secretive. There isn’t even a company website. In the comments Duyfken has been confused with people with the name Duivenbode – that is completely unrelated (to avoid confusion).

Update on Dufyken

Most of the Duyfken partners have their roots at Optiver (Erkens, Stoffer, Brinke). From IMC comes Stijn Boon – who traded in IMC colors in the AEX Index pit. The managing partner is Stoffer. The latter is also the owner of one of the priciest houses in Amsterdam Zuid.

Grow a mo for your bro

Prof, Stoffer and Vos

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