Poker championship for traders

20 comments / February 4, 2010

Among normal citizens, good traders usually do quite well in a regular game of poker. Some traders are even better in playing poker than trading derivatives. Anyway, get your agenda’s as February 27th you’ll be able to win the title of the best poker-playing-trader of Amsterdam.

But there’s more good news. All revenues will flow directly to charity, in this case the Jasper Against Batten foundation. The Batten disease is a rare, cruel and fatal childhood disorder for which there’s currently no cure (wiki). Jasper is a kid suffering from the Batten disease and his parents launched the charity foundation to raise capital for research. There’s a connection to the proprietary trading society in Amsterdam, as Jasper’s father is employed by Fortis Clearing in Chicago.

The buy-in is 200 euro each and all drinks, food and other catering costs are paid for by other sponsors. Hence your full 200 euro’s are going to Jasper against Batten. And well, there’s nothing to win but the glory and one-year bragging rights.

Firms can sponsor the tournament with the auction of the table names. Of course, the name of the table for the final will go to the highest bidder. There’s a maximum of 100 players, and some 20 traders from several firms already confirmed their participation.

Date : February 27th, 2010 (saturday)
Location : The Mood, Keizersgracht 125-127, Amsterdam
Sign up : send mail to somers@marketwizards.nl
More information: jasperagainstbatten.org

TOM is confused

26 comments / January 31, 2010

The joint venture of online retailbroker Binck and trading firm Optiver has changed plans. The new chief Willem Meijer isn’t afraid to admit the whole plan initially was intended to channel Binck’s retail flow into the books of Optiver with TOM, which stands for The Optiver Machine. The reason for this sudden turn-around isn’t quite clear. Could be the financial watchdog and the rest of the market gave them an off-the-record red stop sign. The ethical standards of Optiver isn’t something many people rely on.

The new plans

Anyway, it’s time for something completely different now. Something difficult, as the new CEO has got a hard time explaining the new plan. It sounds like a hybrid version of the old plan mixed with plans for a new exchange. The final product is so complicated it can’t be explained yet, nor any details could be given. It should be very simple:

A) Binck is creating an in-house matching system, with Optiver matching all Binck’s retail flow
B) Binck is creating a completely new trading platform, with Optiver as the first committed liquidity provider

These options don’t mix. Building a new stocktrading exchange is a piece of cake compared with a new option trading platform. The questions marks on clearing, matching, margin and open interest must give a serious headache. Nevertheless, the chief Willem Meijer is an optimist. Trading in options on his new trading platform will start this year, and with some luck even before the summer. That’s definitely not going to happen.

Stock trading

Creating another stock trading exchange can be done. When Binck’s retail flow is routed to the exchange with the best offer, it will be a tremendous challenge to compete with the combined bid-ask spread on Chi-X, Euronext, Bats and Xetra. Again mister Meijer doesn’t seem to get the point. It’s not Binck’s decision where to route the orders, it’s the best price on the market which is king. It’s not like opening a shop with guaranteed customers.

Small option market makers

For the purpose of maintaining a competitive and healthy market with many participants, the small market makers can’t be missed. The small market makers Calimero, Munnik and Klinkenberg announced their concerns with a new option trading platform. Connection expenses, hardware investments and software upgrades are absolutely necessary to join trading on TOM. Their concerns are very reasonable and justified ; the developments are seriously threatening their very existence.

The quitter in the illiquids

4 comments / January 28, 2010

The small market makers of Euronext have some curious complaints. Liquidity providers in the illiquid and quiet stock options like BAM, Corio, Fugro and Aalberts are upset. The major complaint is the sheer lack of traded volume.

It’s really quiet in the quiet stocks. That sounds the same as an eskimo complaining about the freezing temperatures in the polar circle. Nevertheless, this anonymous market maker announced in the newspaper Financieele Dagblad to consider quitting his pmm (or cmm) license and move on to the liquid daily and weekly AEX options.

Munnik Options most likely

Tried to identify this firm quoting these four illiquid stocks, but Euronext successfully barred this attempt by messing up the ELPS sheets on their website. Joost or Alan, please have it fixed and show us the liquidity provider list. In the mean time, I would place my bets on Munnik Options as the quitter in the illiquids.

Heavy volume in daily AEX options

The daily and weekly casino in the index options are seriously liquid these days. Some 22.000 daily contracts are traded every day, and an additional 10.000 contracts in the weekly’s. That’s a very heavy trading volume compared to the 80.000 traded in the regular index. Enough room left for some former niche market makers.

Smoke signals from Optiver USA

149 comments / January 20, 2010

This website is usually focussing on the Amsterdam derivative markets and its trading firms. However, always very happy to make an special exception for Optiver. The firm is still involved in the case of manipulating oil prices in the US, and the US Commodity and Future Trading Commission (CFTC) is still serious about it.

Optiver also in bed with Binck

The same firm is still joining forces with Binck in their joint-venture TOM : a would-be search engine for stock prices for investors, but in reality is only searching for ways to channel all retail flow straight into the books of Optiver. With just one market connected (Euronext), there isn’t much else to search for.. The joint venture recently fired the manager Jochem Lubbers and replaced him with former SNS Securities chief Willem Meijer.

Firing spree in Optiver USA

Back to the US. Smoke signals from their Chicago office aren’t always easy to interpret, but there’s certainly something burning over there. Some 10% of the staff has been fired last week. That’s around 20 people. The entire management team has been flushed down the toilet as well, for the second time in three years. One may wonder what kind of trading results in the US inspired the recent lay-offs.

Good news for the CFTC. One of the prime suspects in the fraud case is still working there. Well, at least mr Dowson is still on the payroll. He doesn’t feel the need to show up in the office anymore. It’s a stressful job.

Scrocca buys empty shell

30 comments / January 13, 2010

Scrocca is a a modest market making firm in Amsterdam. It isn’t very large, but everyone seems to like them and they’re probably making money on a steady basis. One could say they are the biggest of the small market makers, or the tiniest of the big ones. They are currently ranked number five after Optiver, IMC, All Options and Tibra. In contrast to the Italian name, given by founder and owner Maurizio Scrocca, it’s an original all-Dutch company. They even decided to have an office in a distant boring suburb of Amsterdam.

It isn’t hot news anymore, but something weird has happened to those guys. They actually bought a listed company from Belgium. Maybe a civilized country, but not exactly the heart of the derivative trading world. Rumour has it they recruited the former All Options head of IT, and he may very well have infected this trading firm. Let’s have a closer look at their take-over target.

Option Trading Company
It’s called “Option Trading Company”. The derivative trading business isn’t renowned for its creative minds. OTC was founded by Pascal Vlaminck and Alexander Franco in 2000. After six years they decided to go for a listing on the Brussels exchange. As far as I can see they issued 2 million shares at around six euros. Twelve million looks a lot, but most of the shares are kept with the founders. The stock even climbed to 24,50 in 2007. With a possession of over 90% of the shares, the Flemish and the French can manipulate the share price as much as they want.

They couldn’t lock their shares in at 24,50. But no need to feel pity for both of them, as they paid themselves a steady dividend. Unclear what kind of bonus schedule they used. It clearly wasn’t sufficient, as their successful traders ran off beginning 2008. New hires didn’t succeed, losses accumulated and everyone was subsequently fired. The move to a new office was cancelled. Maurizio was happy to help. Have a look through their entertaining press releases when you’re bored. Or the Belgian press following this company (in Dutch).

The two board members were the last remaining traders. Not very successful, and after Scrocca bought the company they were told to go fishing. The question remains ; why does Scrocca buy a trading company without any employees and without any significant assets? The empty shell will have probably some tax assets, and of course access to that other major hub of Euronext : Portugal!

Here’s the last chart before the losses started to kick in.

Amsterdamtrader