The force of the pyramids strikes Amsterdam. Euronext Liffe will list options on OCI NV, an Egyptian company active in the production of fertilizers and the construction business. To my surprise this company, with current headquarters in Geleen, employs 75.000 people worldwide.
Not tiny small cap, it’s a component of the AMX index and next year it will likely be included in the AEX index. Market cap is over 6 billion euros, but 57% of the shares are held by the Egyptian Sawiri family. OCI stands for Orascom Construction Industries, and I’m not sure why they left the Cairo exchange for Amsterdam. Can imagine you will get fed up with the tear gas every day.
The selection procedure for market makers (here) has been changed. Instead of an auction for the tightest quotes, the spreads are defined by Euronext Liffe. Take it or leave it. All Options and Caerus/Webb will quote it, perhaps with 323 and Scrocca.
According to UBS, after this December expiration two new stocks will join the AMX index. Accell Group and Grontmij – expect options on these stocks soon.
Thanks to @margefreek I noticed these OCI shares may be a little different from other less liquid shares. Turnover is extremely tiny with today less than 10k traded. Next to the Egyptian family, another major investor is Bill Gates. Bid ask spread in the stock is medieval. Don’t rule out the possibility no market maker will sign for quoting these options.
So far for the dogs and gods, back to trading. The alternative exchange TOM has captured a large market share in the options market. Especially in the short term index options, Euronext Liffe lost more than half of their flow to their rival.
Monthly options on the AEX index are usually priced with the corresponding future contract as reference price and as a hedge for traders. The volume in the future market is substantial, so there’s a lot of opportunity to grab for Willem Meijer and his firm. Even on very quiet days the volume rarely drops below 15.000 future contracts traded.
The index future market on TOM opened on November 11th this year. The FTI futures are called XNLF at The Order Machine. However, what a surprise. The experiment with futures turned out to be a failure, with an open interest of only 69 contracts after three weeks. This means the real process of price discovery still happens at Euronext Liffe and the trading doesn’t migrate as easily as the option market did.
Playing copycat is working as long as latency isn’t really relevant, and connection with all major traders worldwide is not required. Suppose this is a painful experiment for TOM, as apparently they can’t be seen as a serious exchange just yet. Maybe the automatic order flow from the Binck and Alex customers is making them lazy, at least some razor sharp competition is still lacking among exchanges.
In contrast – the DeGiro online broker is routing everything to the good old Euronext Liffe and charging their customers a fraction of the Binck fees.
As a follow up on last post, just found this youtube video of my pal Tim van der Vliet, the trader who turned yogi. Also starring Ewald Engelen, and English subtitles are embedded. No matter to which extent you (dis)agree with the opinions shared in the video, you must admit this is a professional piece of work.
If you are in a hurry, on 1:42 nostalgic photos of the RD crowd.
With the shut down of the open outcry trading in Amsterdam end of 2002, a lot of young men suddenly lost their job. Their game of trading didn’t exist anymore. Trading options on the screen turned out to be a whole new ball game. Time for a career switch. Some retired, other traders found a new profession. Teacher (economics), risk manager, selling beds, selling coffee machines or cleaning windows. And some people in the energy trading business of course.
Last weekend in our largest newspaper, De Telegraaf, a story of another career move (link, NL). Former market maker Tim van der Vliet turned into a writer, a spiritual writer to be more specific. He started as a local in the pit, together with Bodo Groen (currently director of Park Frankendael (link, NL). He made 200k profit on 9/11 with his long gamma and long vega position. Keep in mind this wasn’t a safe company profit, he was trading with his own money.
According to the story, he was terrified of losing his 600k fortune. Not much later he indeed lost it all. The good part was the fear of losing was worse than the loss itself. Lost it on a single day, according to the Telegraaf headline. In reality he stayed vega long, gamma long and delta short – and in a time of sinking volatiles this was killing. Lost everything between December 2002 and April 2003. That’s the same period as the open outcry finally migrating to the screen, so it’s also the tale of a pit trader who failed on screen.
Tim joined the Swiss algo firm Source Capital, the research desk. Yes, the very same company discussed in the comments on this website recently. Worked with some of the best brains in the business, passed his CFA exams and after five years sold his stake in the company for a tidy sum. Well done, exit trading and enter zen writing.
He writes in English, he self published his book Spiritual Awakening (the easy way) in 2010, was picked up by Hay House Publishing – a kind of new age publisher. Available at Amazon. The book was republished, and this year his book is being translated into Dutch. Published by Lev (Bruna).
Mysticism, new age and spiritual books – not really my cup of tea. But the guy is apparently good in what he’s doing, and is a friendly chap. I may give it as a Sinterklaas present to my mother-in-law. And borrow it back to read what he has got to say. Could also attend his guru presentations, but really – that’s a bridge too far.
There’s a new movie coming up about a rogue trader, not surprising after all those Adoboli’s and Kerviel’s last years. Even better, it’s a Dutch movie, not surprising with all the Dutch trading firms ruling the global markets (ok, just kidding). Had the opportunity to have a coffee with the guys behind “Onbeperkt” (“Unlimited”).
Their knowledge about financial markets is pretty limited, but director Tom van Blommestein has been interviewing a dozen traders in the last couple of weeks to get a clear picture. After all it won’t be a movie about trading, but about a (former..) trader. Matthijs van de Sande Bakhuyzen will play the lead role and scenario by Philip Rolig. Shooting will start in a few weeks.
It’s a graduation project by the Nederlandse Filmacademie. Will be broadcasted on national television and shown on film festivals around the world. The guys still need some financing for their film, and started a crowdsourcing item on Cinecrowd. Somehow they only need a tiny
300k 3k – of which only 1k is still left. With all you billionaire traders reading this, consider donating a few bucks.
One day there will be subtitles. But not yet.