Nee, dit is niks jongensIt’s going downhill at Euronext. In a press release, the exchange announced to introduce weekly index futures in the fourth quarter of this year. That’s the most silly idea I’ve heard in a while.

In the AEX, there have been weekly options for a long time. A big succes, decent volumes (although most of it at TOM). Market makers usually have to juggle a bit with their delta exposure. Hedging delta’s with monthly futures has a maturity mismatch. These market makers could use weekly futures.

The problem is – they are the only ones. Every sane investor or trader will head for the most liquid future, which is always the front month. Apart from some dividend impact, there’s not much interesting in other maturities.

It’s difficult to get a liquid future market. TOM failed miserably with their AEX future market, and won’t even bother to launch futures on their NL20 index.

Quoting Adam Rose, head of financial derivatives at Euronext:

“This is a good example of how we want to drive growth in our derivatives franchise across Europe by being innovative and responding rapidly to client needs”

True. Euronext is absolutely the first in Europe to launch weekly futures. In reality, there is a reason these things don’t exist anywhere else on the continent. For example, take the most heavily traded index product in Europe, the Eurostoxx. The Eurostoxx futures are quarterly futures – they don’t bother for monthly maturities.

Financial Footbal #11

15 Jul 2014

A few days without a major football match, starting to miss it. But there’s good news, as end of August the 11th edition of the Financial Football Tournament will be held in Abcoude. Save the date, August 30th.

Everything will be smoothly organized by Ferry Boekholt as usual. BBQ, kindergarten, good weather- Bennington takes care of it.

Guess the German teams are going for the double. Last year the cup was won by Eurex. Understandingly, they are in a winning mood. Although Neuer was lucky to stay on the pitch.

rode draakLast year has been a profitable year for Optiver. CEO Paul Hilgers, who took over the helm six months ago, reported a profit of € 174 million over 2013. That’s 23% more compared with previous year.

Trading revenue was up 26% to an impressive € 466 million. The expenses were up a few million as it hired more employees for IT, back office trade processing and administration

Outperforming rival IMC

Once again Optiver earned more than long term rival IMC, which saw a profit of €127 million and trading revenue of €403 million in the same period.

Big in Japan

Unfortunately there’s no annual report available just yet. Company decided to release the figures to a few newspapers before releasing the full report. Main comments in the FD was more than half of the profits come from outside the European Union.

Particularly Hong Kong and Japan have seen very good trading conditions. Due to the aggressive monetary policy of Shinzo Abe, the trading volumes in Japan doubled. Volumes in Europe and the US have been flat.

Company is about to expand in the US in other asset classes, but targets organic growth without acquisitions. This in contrast to IMC, which bought Goldman Sachs’s post on the floor of the New York Stock Exchange.

wpid-Photo-20140623235015.jpgThe firm Van der Moolen went bankrupt half a decade ago, but it isn’t over yet for Richard den Drijver and his partner in crime Hans Kroon. Several investors are still trying to recover some of their losses. Usually, the board members are protected by a company insurance policy. After all, nobody wants to be at the helm when risking massive claims.

And the claims are substantial. Den Drijver and Kroon are facing a claim amounting some 130 million.

Here’s comes the good part. As court decided the fall of Van Der Moolen was due maladministration, insurer AIG walked and left Den Drijver and Kroon on their own. For starters, they have to pay their own lawyers. Sidney Berendsen, lawyer for Loyens & Loeff, is defending them. But he isn’t into charity, and the bill outstanding is almost a million.

In the case between AIG and Den Drijver/Kroon, court decided AIG has right to walk away. Both gentlemen may have ruined shareholders but are still living in several expensive apartments. Hell, they have been listed on the Quote 500 list in 2009 edition (nl).

Maybe it’s wise to pay your own lawyer. Especially when he’ll defend you against a 130 mio claim. Maybe he’ll eventually broker a settlement for you, negotiating the claim to a more modest amount. Say, 13 million each. Negotiations are ongoing, FD reports.

nyse-euronext-indicesEuronext shares will float today after the IPO has been priced towards the low end of the range. It’s also the third friday of the month with a lot of futures and options expiring. A lot, but also a lot less compared with earlier years.

The shrinking turnover is one painful development for the exchange. The other one is the fierce competition from especially Chi-X (in stocks) and TOM (in options). Could be a coincidence, but most retail order flow will move to Chi-X this week.

TOM announced this week Chi-X is connected to their Smart Order Routing (SOR). In general the market at Chi-x has the same spread as Euronext, but trading is a lot cheaper.

Lower costs of trading for the banks and brokers, that is. Retail investors in Europe won’t benefit from lower fees. Especially TOM is taking great care of their own shareholders. Clients of brokers such as Binck and Alex won’t save a penny.

Euronext. Not much hyped IPO, and a lot of room for cost cutting. They could run the business with less than a third of the current 850 employees. Selling some magnificent real estate is another possibility. However, regulatory / national issues will halt most progress.  Without reading too much in the prospectus, Amsterdamtrader starts covering of ENX with a HOLD rating.

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