Last month the liquidity providers for the option classes listed on Euronext where redivided. Of course the situation hasn’t really changed from last year, with the exception of the exit of VDM/Curvalue and the entry of some new firms consisting of former Curvalue traders. In addition, the Americans from Susquehanna are participating as well.

Primary Market Maker (PMM) versus Competitive Market Maker (CMM)

There are two kinds of liquidity provider roles. One with limited bandwith and limited obligations (CMM’s) and the more scarce roles of the primary market maker – who is required to quote all existing strikes all trading day in an option class, including the possible long terms.
Notable is that all liquidity provider roles are counted, while some classes are boring and illiquid like the Sahara desert and others are serious trading spots. Running a cafĂ© in the desert could be very interesting, when people drop by they are very thirsty. This comparison isn’t far fetched. Another small detail is the traded volume by each firm isn’t taken into account. Firms like 323 Trading and Timber Hill may have comparable presence in the liquidity provider list, but it’s no secret 323 Trading is slightly smaller. Timber Hill could be trading more volume each day than 323 Trading in a whole year.

Looking back to last year’s ranking, a few significant changes are interesting. The Australians from Tibra must have decided to cut back in the amount of liquidity provider roles. They’re going back from 47 to 20 roles. Furthermore the merged company of All Options and Saen was forced to return half of their LP roles as a consequence of the Euronext rules, which prohibit double primary market licenses by the same company in the same class. Another silly thing which raises questions is the relatively small Munnik Options, which must have quitted most small roles and is focussing on the index only. Reasonable perhaps, but this means they have to be dropped from the prestigious who’s who list below.

The firms with the most PMM roles:

  1. All Options (45)
    Optiver (45)
  2. IMC (24)
  3. Scrocca (23)
  4. Leopark (18)
  5. 323 Trading (16)
  6. Tibra (13)
  7. Susquehanna (12)
  8. Caerus (3)

The firms with the most roles, CMM and PMM added together:

  1. All Options (57)
  2. Optiver (56)
  3. Goldman Sachs (42)
    Susquehanna (42)
  4. Timber Hill (38)
  5. IMC (32)
  6. 323 Trading (31)
  7. Leopark (29)
  8. Scrocca (27)
  9. BNP (21)
  10. Tibra (20)
  11. Archelon (20)
  12. Hardcastle (18)
  13. Caerus (17)
  14. Fluhalp (12)
  15. Calimero (11)
  16. Nino (10)

Source; Euronext, information from May 3, 2010