The art of firing at IMC and All Options

There's a good reason not to laugh at your former fellow traders being fired. You could be next. Especially when you're working for IMC. After sacking two traders on bonus day, an additional twelve traders were shown the door. Management doesn't escape from the cost cutting efforts neither, as the Hong Kong and Sydney offices are centralised under one management now. One must admit IMC has developed a certain routine in firing their employees. Employees with a track record longer than five years make up for a just little more than 5% of the total staff.

IMC isn't the only trading firm letting people go. All Options has been trying to lay-off dozens of traders and support staff after the take-over of Saen Options. During the fall of 2009 results were pretty bad, bonuses were terminated and large numbers of employees were told to leave.

Here's the funny part. Amsterdam is part of the Netherlands (really), and in this country it's rather difficult to fire people at all. You'll need a permit of the local government agency called the UWV, and explain the reason for firing people. If you have a good reason, you can proceed with the legal stuff in court. Give 'm some money (say, 1 month per worked year for your firm) and you are done. When you're trying to fire people because you've found other people to do the same job for you for less money - the government will generally show you the finger. You really need true economic reasons to cut staff.

And surprise, the UWV gave All Options the finger and didn't grant a permit to fire people. It accused All Options to be cooking the books and the firm couldn't come up with any economic reason. To worsen things for All Options : they face a court hearing for mishandling the labour rights of 100 employees.

A failed firing spree means continue paying the salaries, and take people back. Maybe All Options could persuade them to leave voluntarily, but quitting your job voluntarily means no unemployment benefits. Generally it's wise to stay nice and as a trader avoid any signs of a "disturbed relationship" ; which could a viable reason to fire you. The firm will have to bleed. The one in charge for firing everyone, is now fired himself. Guess it wasn't a problem to get a permit for that..

Anyway, still jobs available at IMC and All Options!

Van der Moolen's garage sale

The big auction of Van der Moolen's possessions in January was a big success. The proceeds did amount 400.000 euro, which was more than expected by the administrator. In part this may have been caused by former employees, overpaying for the computer equipment. The involvement of former VDM traders has been confirmed by the administrator.

A lot less media exposure was given to the second auction, ending a couple of days ago. The most valuable asset in the auction was the large painting of Hans Kroon. This piece of art was sold for a tidy amount of 245 euro. Sadly enough, I've missed this great buying opportunity. The question is, who is the lucky buyer? Hans Kroon himself? Avalon Media Group? Or did Richard den Drijver bought it as a birthday present for his former partner-in-crime? Perfectly willing to pay 250 300 euro for this masterpiece.

update

More interesting than the assets auctioned, are the missing goods. Nobody has ever seen the painting with the VOC ships again. After some research there appears to be something wrong with the traditional Mercurius statues, too. Two of them were sold in the first auction, correct. But the company had three of those statues. The third one ended as souvenir above the fireplace in the living room somewhere. Maybe next to the golden windmill, which also remains missing.

You're fired, IMC style

Firing people is never easy. Especially when you still want to feel good about yourself, and keep the other traders happy and confident. Scores of books are written on the fine art of laying people off.

Trading firm IMC doesn't need any advice for firing people. They've found a perfect way to get rid of traders. Last year a few dozen traders and support staff were told to leave by surprise.

They have been fine tuning their approach to reach maximum effect. On the exciting day the bonuses were to be announced, two traders received a completely different message. "Your bonus over 2009 is... hey, guess what - you're fired!". Sounds too sadistic to be true. Some kind of urban legend. Strange enough, it appears to be completely true. The traders weren't trainees, but experienced traders with a credible track record. This really seems to be the way IMC is treating their employees. Curious to know how management communicates this to their traders.

There's a very good reason to be a reliable employer in the trading business : You reap what you sow.

Poker championship for traders

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

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 optiontrading 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 existence.

The quitter in the illiquids

The small market makers of Euronext have some curious complaints. As a liquidity provider in the illiquid and quiet stock options like BAM, Corio, Fugro and Aalberts they are very 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.

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.

The daily and weekly casino in the index options are seriously liquid these days. According to the FD 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

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.

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.

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.