The tragedy in Japan has sent markets south, but only after the nuclear problems in Fukushima appeared too difficult to handle a few days after the disaster struck. While there isn’t any market maker betting on the occurrence of this kind of misery, most market makers will be hedging their downward risks in any market. The far otm puts weren’t much in demand recently, but this “black swan” must have shaken up the profit and loss accounts of all firms. So far it looks like all market makers with operations in the Nikkei options have survived – but some must have taken hits for sure. Ongoing revolutions and wars in oil-rich autocratic regimes add another layer of uncertainty the coming weeks. Also, Knut passed away in Berlin. When trouble comes, they come not in single spies but in batallions.
Back to small local business
Introducing new option classes is free and easy for the exchange. Liquidity providers are generally happy to commit themselves to send their quotes – and when there’s no volume there aren’t any costs for Euronext and Eurex. It’s just the market maker which is trapped into the quoting obligations and taking risk. Anyway, two more illiquid tiny option classes to be introduced very soon. Brunel International (BI) on April 5th and Koninklijke Ten Cate (KTC) on March 29th. Signing up for primary or competitive market maker licenses ends for KTC this monday the 21st. However, I can’t imagine there will be much apetite for quoting these options so there’s no need to hurry. One can always join in on vacant places afterwards. After all, a primary market maker license (pmm) for Vopak, Nutreco, Aperam, Aalberts and Heijmans to name a few are freely available.