Searching a job as market maker

229 comments / November 9, 2009

Recently several comments and e-mails by fresh university graduates requested for more information on getting a job as a derivative trader in Amsterdam. As the visitors, Google and this site are close friends it would make sense to write a tiny how-to and where-to get a job in Amsterdam trading firms.

Basically there are seven market makers where university graduates could apply. There are definitely more firms around, but most of them are small operations, or you have to bring your own money or they are only recruiting experienced traders. Some new firms are expected as the broken pieces of Van Der Moolen are probably trying to start something new. The firms without an office in Amsterdam aren’t taken into account at all, but they generally aren’t interesting to apply for a job anyway.

As famous trader Frank Zappa already stated, we’re only in it for the money. It’s hard to say where to find the best bonus deals. At some firms junior traders won’t receive much, and elsewhere the fixed salaries are higher. After the crash of VDM there’s no market maker around giving insight in the trader compensation. That’s a pity.

I’ll just make list of the firms. Very subjective, but one has got to start somewhere.

Optiver
The largest Dutch market maker with a reputation for having the best software and employing the most nerds from all over the world. Their recruitment procedure is though and most applicants fail for the math test. Minor problem is their reputation for manipulating markets and fraud. Legal battles against Tibra and US trade authorities.
Founded : 1986
Location : WTC
International : Yes

IMC
The second market maker is IMC, or the International Marketmaker Combination. In past years the company didn’t know where to spend it’s money and expanded into websites, newspapers and even a bank. Amsterdam office reportedly isn’t doing very well after the departure of dozens of traders. The US operations in the Sears tower in Chicago is dwarfing the Amsterdam office.
Founded : 1989
Location : WTC
International : Yes

All Options
Allard Jakobs started All Options after his earlier company Goed Gedaan Options failed in 1998 on a huge failed arbitrage spread. Was subsequently banned form Euronext for years, but returned in 2005. Made the jackpot with the Altana superdividend trade, bought rival Saen Options early 2009. All Options deserve credits for organizing the yearly soccer tournament. Company appears to be struggling with internal clan warfare and too many managers.
Founded: 1998
Location : Centre (Beursplein 5)
International : limited

Tibra
Traders from Optiver Australia resigned and started their own firm, allegedly taking the source code of Optiver’s trading software with them. Under fire of Optiver’s lawyers ever since in a legal battle. The Australians decided to challenge Optiver on their home market in Amsterdam.
Founded : 2006
Location : Centre (Singel)
International : Australia

Scrocca
Small firm recently evolved into a serious market maker, although still mainly seen as an underdog. Despite the name, it’s an original Dutch firm. Location is even more boring than WTC.
Founded: 1997
Location : Far west (Sloterdijk)
International : no

Flow Traders
Started by former Optiver traders. Not really a market maker but focussing on arbitrage, and according to some press reports quite successful in trading ETF’s. Or just succesful in public relations, that’s another possibility.
Founded : 2004
Location : East
International : Limited

323 Trading
Small market maker which seems to be old-skool kind of operation. Very limited trading, with a very few traders. By far the smallest company on the list, and more like other small firms.
Founded : 2003
Location : Centre (Nwz Voorburgwal)
International : No

All Options to teach option trading

120 comments / October 26, 2009

After years of begging by the rest of the market, the *ahem* prestigious firm All Options is about to give classes in option trading. Clean your agenda and cancel all appointments for November 10th and 20th, as the master classes will be free of charge and aimed at the very advanced option trader. Euronext and All Options will spend three hours on some Greek variables like vega, theta, gamma and delta. Meet your teacher in this student magazine (pdf, Dutch), seems a reasonable guy. Bad news however is the timing schedule, as the session runs from 10:00 to 13:00 on Beursplein 5. Hence, don’t count on post-class drinks.

You can apply for the free master class by mail. Question remains what a retail investor should do with extensive knowledge of the derivative pricing theory. Nothing really. Market makers compete for split cent margins with full delta hedge, retail folks would burn their money on transaction fees. Nevertheless, let’s not be too cynical and negative about Euronext/All Options joint efforts, although a true step would be to reduce trading fees for retail clients on Euronext. It’s a way better approach than handing over your customers to the sharks of Optiver. Did Binck’s head of retail Marcel Kalse quit his job after resisting the plan of selling their retail customer flow to Optiver?

Susquehanna to begin as PMM

48 comments / October 16, 2009

Susquehanna International Group has successfully taken over some of the primary market maker spots which came available after VDM went out of business. However, they haven’t exactly conquered the crown jewels.

PMM & CMM
As a primary market maker (pmm) one has the obligation to send quotes in all series in an option class. Short term, long term and even deep in-the-money options will have to be quoted. In return for this obligation the market maker doesn’t get paid, but its full presence in the market could generate a profit. Euronext supplies extra bandwidth to the the primary market makers.
The competitive market maker (cmm) receive less bandwidth, and are obligated to quote a minimum amount of at-the-money options. Twice a year the pmm and cmm licenses are auctioned by Euronext, based on subscribing to tight spreads and a large quote size.

Susquehanna
Susquehanna (wiki) will start as primary market maker in the following eight option classes : Air France, Crucell, ASMI, Nutreco, Vopak, Draka, Fugro and Wolters Kluwer. Must admit they have a strong appetite for the illiquid problem children of Euronext. Nobody wants to gurantee liquidity in these stocks, but Susquehanna is willing to give it a try. In addition, they signed for all competitive market maker licenses available. It’s the very first foreign market maker becoming primary market maker on the Amsterdam derivatives market.

Other VDM leftovers are taken by Leopark.

All Options mistaken for a white knight (DSB)

19 comments / October 14, 2009

For the second time in a week I mistook very serious news for a joke. It started with a fresh president receiving the Nobel peace price. Five days later the local market maker All Options announced interest to buy the remains of DSB Bank.

The big chief of All Options, Allard Jakobs, is notorious for his megalomania. Nice to have oversized ambitions, but it would make sense to stay in touch with the real world. Buying a troubled rival market maker isn’t comparable to taking over a collapsing bank. A consortium of five major banks didn’t want to bear the risks earlier on. But Jakobs smelled an opportunity.

Anyway, the administrators of the failed bank DSB and the Dutch national bank must have thought the same thing. A relatively small market maker in options isn’t the most likely buyer of a bank. Putting up 5 billion euro guarantee is something different than financing a few million of Van der Moolen spin off Alphabay. Oh, and please – put up the money in a few hours and stop wasting our time, must have been the additional message.

Labour unions dream of the white knight

The labour unions cried foul. Let’s give the very “serious” and European institution a little bit more time to take a crash course in “banking for beginners”. The administrators of DSB bank wasted an opportunity to save 2000 jobs.. Could anyone call the labour unions that most of the derivative trading houses had a good laugh reading the story of All Options (or All Capital) buying a serious bank?
One may wonder what mister Jakobs was thinking when Lehman Brothers went down one year ago. He must have been waiting endlessly for an invitation by the New York Fed to save the bank.

Update 1:
Spokesman of All Options (“All Capital”) denies involvement in the Dutch newspaper de Telegraaf. Sure.

Update 2:
According to administrators of the DSB Bank, they turned down All Options (“All Capital”) as a potential buyer. Spokesman Martin Strijk from All Options claims they never wanted the DSB Bank anyway. But nobody believes him.

Update 3:
De Dutch magazine Quote shed some extra light on the matter.

Van der Moolen files for bankruptcy

194 comments / September 9, 2009

After some 500 negative comments on the earlier posts on the fall of Van der Moolen, this won’t really come as a big surprise. The company finally filed for bankruptcy Wednesday night. One day earlier the brokerage department (Aespen) escaped the burning house with a management buy-out.

The press release noted that discussions on the transfer of remaining trading positions are in an advanced stage, and everything will be liquidated. Without positions the traders won’t be of any use – they will probably be fired.

Nothing left for shareholders

There won’t be anything left over for the shareholders. The share price will sink as it turns out to be a worthless piece of paper. The company will join the mass grave filled with the corpses of DAF, Baan, Ceteco, KPNQwest, …

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