Dutch option market makers ranked by quotes

8 comments / January 21, 2009

The Dutch option market is a small world. Europe’s oldest option market has a couple of foreign trading companies in the electronic pit. Yet, the biggest market makers still have Dutch roots.

The secretive nature of trading means it’s impossible to rank the market makers in terms of market share, headcount or profits. Juicy rumours of competitors in trouble are frequent and often exaggerated. Salary and bonus deals vary.

Ranking liquidity providers by licenses

However, it’s possible to have a look at the quantity of liquidity provider licenses. They come in two flavours, primary market makers (pmm) have the duty to quote all option series in a stock, while competitive market makers (cmm) have the obligation to quote a limited number of near-the-money strikes. Both have a few pro’s and cons, but generally speaking the pmm licenses are harder to obtain and more valuable.

Closed shop

It’s a closed shop and newcomers are barred from entry because the liquidity provider licenses are limited in number and some companies still benefit from first mover advantages.

This is the list of the market makers on Euronext Amsterdam ranked by the number of liquidity providerships (between brackets). More licenses usually means more traders or more advanced it-systems – but for sure more quotes and influence in the market. Tibra is Australian, Hardcastle and Timber Hill are American and from Germany there’s Archelon. Note that the two banks in the list probably only send quotes to benefit from the trading fee discount. Smaller companies haven’t been included in the list.

Optiver (55)
Curvalue (50)
Saen Options (49)
Tibra Trading (47)
Goldman Sachs (41)
All Options (41)
Timber Hill (34)
Scrocca (29)
IMC (26)
323 Trading (21)
Leopark (21)
Hardcastle Trading (20)
Munnik Options (20)
BNP (19)
Archelon (19)
Calimero (11)
2B trading (9)
Cho Option Traders (8)

Source: Euronext. Information per January 1th, 2009. PMM + CMM added together, bankrupt firm Intal left out of the list.

Alles ist vorbei

0 comments / January 20, 2009

Deutsche Bank‘s traders can start looking for boxes or plastic bags. Rumor has it all proprietary trading will be halted at the German bank. All credit trading is shut down. There have been consistent rumors in the market all other proptrading will be ended as well. Deutsche Bank’s European trading desk is based in London and staffed with a lot of French traders with lousy accents.

Bankruptcy avalanche to hit US stocks

0 comments / January 16, 2009

A wave of bankruptcies will hit the US stock market according to Gunnar Stangl, strategist at Dresdner Bank in Frankfurt.

The crest of the wave is still going to hit us. Bankruptcies are really just like a slow avalanche

Impressing chart. Busy with option expiration today. (click for larger picture)

The lottery metaphor

2 comments / January 14, 2009

Being an option market maker has a few drawbacks. It’s impossible to explain to friends and family what you’re doing (“what? no clients?”). Faced with new friends or in-laws I try the Monty Hall Dilemma (aka 3 doors dilemma) on them to get a grasp of their statistical curiosity. If explaining the simple quiz show question doesn’t work I usually give up and accept the nickname “Chandler”.
Read more

Sticky Fingers

0 comments / January 13, 2009

Breaking news in this morning’s Financial Times frontpage: Successful traders can be identified by measuring the length of their fingers.

According to researchers from Cambridge University a longer ring finger compared to the index finger means more success in competitive markets. As stated yesterday, the call-to-put ratio can be send to the trashcan – the 2D:4D ratio is the new king.

Amsterdamtrader