New games at Euronext
Last post I mentioned a new Dutch community site for retail investors. It’s looking allright but is still seriously lacking critical mass. Anyway, the site is launched by online broker Binck/Alex and although they are evolving into a straight competitor of Euronext’s stock trading platform – the relationship between them is fine. In this column there’s some interesting news to be read (Dutch).
Ideas from the product development department remain there most of the time, but one of the following ideas may seriously make it to your screens:
- Extended trading hours for daily AEX options until 18:15. The future remains open for trading until 22:00 anyway, so there’s hardly any barrier to block trading in the options. Maybe it brings some extra flow, and other professional traders could hedge some risks after the regular close. Forcing liquidity providers to keep on quoting another 45 minutes could be another story.
- Future contracts on the AMX Midkap index. Point of discussion is which block size should be used. Margin requirements would be killing with a similar block size like the AEX. With a tradable future contract – options on the AMX are just a small step.
- The outrageous transaction fees effectively prevent real trading in the weekly single stock options. While cutting fees to competitive levels is a bridge too far for Euronext, considered is expanding the contract size from 100 to 1000 underlying stocks.
- Introduction of futures on gold. Not as easy as it seems. Physical delivery is the common style in the rest of the world, instead of cash settlement.
TOM
In the meantime the trading of shares is slowly getting more fragmented. Chi-X is doing great volumes, and the other contender TOM is gaining a little bit of significance. Their market share is something like one percent of Euronext, but in some typical retail stocks (SNS, BAM, Wavin, Logica) TOM is doing a lot more – up to 4% (pdf). This week they managed to get a day with 4% in ING and even 8% in SNS.
Dobber
Finally, there’s some good news to report as well. Quotenet reports Jan Dobber (Optiver) managed to find a bid for his house in Bloemendaal. For sale as of May 2009, he had to cut price from 3.2 million to 2.3 million. No need to feel pity about the price drop. He bought it for as little as 1 million back in 1998.
Trading floor
After All Options left the big trading floor in the exchange building, the area must have looked empty and deserted. Smaller firms currently trading from an office in the exchange building will move to parts of the trading floor. Leopark as well as Klinkenberg will trade from there for at least three months.
Timber Hill
A commenter submitted a link to the released earnings of Interactive Brokers. Their market making unit Timber Hill did a lot worse than 2009, with revenues dropping 73% due to low volatility and tight spreads. No indications of Norwegian retail traders fooling their system this time.
Markets still closed. Amateurs at Euronext.
Re: with revenues dropping 73%
Trader Jack, man, thats careless .. Income before income taxes is down 73%, Revenues are down 40%
Non-interest expenses are little changed; must say they managed those expenses remarkably well !
where will TOM go, TurnOver€ 108,629,809 vs volume 9,602,100
Which party are live on TOM only Optiver vs Binck.
Yeah TOM has had eight weeks of static turnover – static turnover of FUCK ALL that is. Closed down by the end of the year?
how much is the variable cost vs fixed cost in TOM ?
Yep, very misleading on your quote for Timber’s income, pieces from your link:
GREENWICH, Conn.–(BUSINESS WIRE)– … Reported results include the effects of a special dividend to shareholders paid in December 2010. Reported results ….. Excluding the effects of the dividend and the currency reporting convention together, the Company estimates, on a non-GAAP basis, diluted earnings per share of $0.73 for 2010 ($1.04 for 2009).
…… Adjusted for the dividend and currency reporting convention described above, on a non-GAAP basis, 2010 net revenues were $1,070 million ($1,205 million in 2009) and 2010 income before income taxes was $499 million ($649 million in 2009).
on TOM: their statistics are flawed. or do chix, bats e.a. trade nothing in these markets? their market share is even lower than the pathetic 1%.
TOM is aimed at the derivativesmarkets , that’s where the money will come from . We will see lower fees once TOM is up and running . Costs are very low almost no employees and IT is outsourced .
As long as Euronext will be challenged I’m happy .
Euronext is really a shame !
There is nothing to look forwards to about TOM. Optiver will have the pick of the trades before anyone else or the market gets to decide if they want to participate.
Tom will be good for retail investors as well. They will get the tightest markets to choose from in Stock options.
TOM is an MTF so Optiver has no priority over anyone else . They are a shareholder so if TOM is an succes they will make money .
Re: TOM is an MTF so Optiver has no priority over anyone else .
Are you sure ? I dont recall completely, but last year there was huge discussion that optiver will have first look at incoming orders and can pick the good ones for themselves, the other market makers are suppose to wait 2-3 years before they are at same footing as optiver operating on TOM ..
TOM is an optiver and Binck Bank initiative.
Optiver will have first priority over all incoming option orders. Otherwise it makes no sense for them to invest.
TOM is bad for retail investors in the long run as Optiver will drive the other market makers out of business, leaving wide quotes on the screen which never get hit as Optiver and the other dark pool owners (big banks etc) take the best trades. Soon the only trades occuring will be on markets the fx dealers at the airport consider wide.
7:38 You don’t get it . TOM will be an MTF just like CHI X or BATS .
Optiver will not have priority over any other marketmaker . If you don’t believe me ask for the rulebook . If TOM will be a succes it will be worth a lot of money . If you don’t believe that either look at what was paid for CHI X or look at the valuation of Euronext . The discussion last year was about Optiver internalizing the flow of Binck but since they’ve become an MTF that is no longer an issue .
Even if TOM only grabs some % of market-share, Euronext might lower their fees in turn: this will imply a win-win situation for Optiver.
On the other discussion: Optiver can not possibly get to see the orders first before any other market-participant (that is, after others have joined TOM of course). If any auditor or regulator would find out, they’ll be in big trouble.
They stated in the beginning that optiver gets to trade the order if the price is equal or better then the price to be paid at euronext. So as far as I know optiver has an advantage to market makers that only provide liquidity at euronext.
Of course if all market makers will join TOM there will be some competition.
Well, speaking of TOM, it seems that Euronext is grilling them on the question of fungibility: http://www.fd.nl/artikel/21272440/spanning-stijgt-nieuwe-optiebeurs
Looks like TOM’s going to be pulling off some magic, making Eurex options fungible with Euronext options.
Who gives a shit about Dobber’s house anyway.
Euronext is fighting for it’s last chance . They know they’re way too expensive ! Fungibility has been taken care of by TOM .
Time that this monopoly of Euronext ends . Just look at America ; very low costs huge volumes!
Re: Who gives a shit about Dobber’s house anyway
Ans: Dobber & Co
Re: Time that this monopoly of Euronext ends . Just look at America ; very low costs huge volumes!
Calm down tiger ..
Re: Fungibility has been taken care of by TOM .
I think that this is the whole point that Euronext is making.
The FD article’s funny about it. The quote the TOM boss who basically says: believe us, we have covered all the risks but aren’t going to say how, that’s confidential.
I hear there’s a few people who are on long hollodays at the expense of taxpayers who also ran with that line: trust me, it’s all okay, but I can’t tell you how I achieve those 10% yields
Given that Fortis Clearing clear all trades on TOM as well as a substantial portion of Euronext options trading, including Optiver’s, one can venture to guess how they intend to solve this conundrum. The key observation is that the fungibility would only apply to what is being traded on screen (with good odds that Optiver would be the counterparty).
That is not the key observation to me . To me the key observation is that finally there is a competitor for Euronext ! Fungibility has been solved and TOM is a MTF so there can’t be any difference in the way that the liquidity providers are treated .