We’ve been trading 2011 options for a while now, and it’s a good thing we’re finally moving on to the new year and leaving 2010 behind us. It wasn’t a great year for many firms, with most well-known casualties All Options and Alphabay. The first is seriously downsizing in both office space and headcount, and Alphabay was forced to pull their quotes altogether within a year.
Brokers in vulnerable position
Operating against unmistakably lower costs are the voice brokerages like Aespen, AFS, IWb and Amstel. A coffee machine, a phone line and a couple of smooth talking brokers is all you need (and a few rounds of beer now and then). But wholesale trading is thin, and spreads on the screen are tight enough at times to bypass the brokers altogether. Although we all know brokers are always lying to the traders – joking aside, I hope all brokers will manage to survive.
IMC posting record profits
Another firm which hasn’t been very popular in the comments is IMC. Agreed, reducing your workforce on bonus-day doesn’t help much winning the popularity contest. Nevertheless, we’re all in for the money (and the thrill of the game) and that’s a distinct point of difference between IMC and All Options last year. IMC got rid of a few dozen traders because they were made redundant as their famous electronic trading systems do actually function properly. Their 52.000 square feet office space in Chicago’s Sears tower is filled with rocket scientists and other quants. Their new style of (semi) automatic trading in options has been ignited over there, and most of the revenues have come from the USA as well – and a portion in Amsterdam too. Ignore negative comments on IMC’s profits – they did fine. Actually, they have been doing better than ever before. Former record year amounted around 60 million euros, my market for IMC in 2010 would be 70 bid at 90. Beating the 100 million hurdle in a year like this sounds too far-fetched.
Expected developments in 2011
Apart from a possible new wave of jobcuts at IMC, there are some serious matters expected.
- Whether or not the new bonus regulations will apply to market makers as well – news expected soon
- Court ruling on allegedly stolen trading software between Optiver versus Tibra
- Sanction for Optiver imposed by the CFTC for whacking the oil price back in 2007
- Official investigation in the Van der Moolen bankruptcy case
Almost forgot – best wishes to all of you, and for the Amsterdam traders and brokers don’t forget to visit the NYSE Euronext New Year drinks this Friday in Krasnapolsky. Euronext is an expensive and slow government-like company, but there’s nothing wrong with their receptions. Cheers.