Droste effect op de beursA kind of meta story. The stock Euronext has been listed on the exchange Euronext for a few weeks now. On August 28th there will be options introduced on the stocks Euronext, on the Euronext derivative market. (AN14-011)

Euronext options (code : ENX) will be a part of the new “spotlight” segment. Currently there are six spotlight option classes : Telegraaf, Altice, BESI, Accell, Sligro and Exact. Rebates, profit sharing and promotional actions with brokers ; only one market maker is interested in quoting these options. Susquehanna (SIG) quotes everything.

Euronext seems to forget they need the liquidity providers. Without market makers there’s no market. Check the options on Kas Bank (no, they don’t exist). Even SIG wasn’t interested to make a market in Kas Bank options (Euronext Notice AN14-007).

No OCI options at Binck

These days Euronext is depending on brokers willing to allow their customers to trade in new products. Remember the Egyptian options from OCI? This stock is a constituent of the AEX index. TOM doesn’t consider the options on OCI very interesting. No OCI options on TOM.

Fair enough, but this means clients of Binck/Alex are blocked altogether from trading OCI options. I’ve checked with Binck why I can’t trade OCI options with them.

There’s not much demand for OCI options, and they are too expensive for us.

Guess they weren’t referring to the implied volatilities in OCI. Binck and Alex make more profit executing retail trades on TOM than Euronext. Retail investors with Binck/Alex can only trade options available on TOM.

Trolling Euronext

TOM could troll Euronext to the max by not copying the Euronext options to their market. This way the majority of the Dutch investors would be cut off from trading Euronext options (because Binck and Alex can’t trade directly on Euronext derivatives anymore). Binck isn’t interested in retail investors, so they wouldn’t object.

Imagine Euronext suing TOM for not having Euronext options. Would be interesting.

SuperdoeiSurprising news last Friday. Cees Vermaas suddenly announced to leave Euronext – with immediate effect. The CEO of Euronext Amsterdam didn’t give a reason for his departure, nor did the exchange. In general, a reason to be suspicious. Apparently the man is moving to competitor CME – as the new head of the European branch.  C

The landscape of exchanges in Europe is getting increasingly fragmented with a dozen of exchanges chasing a part of the pie. However, Chicago Mercantile Exchange isn’t one of them. A powerhouse in the USA, it has no presence in Europe yet. Just opened their doors in London, and are aiming for forex products mostly.

French take over Euronext

Question remains, why would a member of the board of an established exchange jump ship? Checked a few sources. Off the record, people confirmed the French are taking over Euronext. Nobody of the Dutch former senior management has been able to get a position in the group. Everybody reports to Paris. Political games played all over the place, and no feeling with the Dutch market.

The Dutch HR director is forced out, the Dutch retail team will be liquidated. Well, sources can understand “Cees didn’t enjoy working there anymore“. Add a job offer by the boys from Chicago and well negotiated exit terms in his contract : done.

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.

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