Play offs, maar wel wat te drinken erbij graagThe liquidity provider roles have been auctioned again (pdf). Traders can sign on for competitive market maker (cmm, quoting some options most of the time) or more ambitious for primary market maker (pmm, quoting all options all of the time).

It’s hard to judge whether or not quoting options gives a comparative advantage to other traders, but it sheds some light on the strategy of different trading firms (or the lack of it). Besides, it’s good for the competitive spirit to have several play-offs for the most popular primary market maker roles (pmm). Current pmm’s having met their quoting obligations for a year with a decent size and spread will be relieved from this competition. This season we have a record number of four play offs. Options on ING, KPN, Unilever and Tom Tom  will see fierce competition for quoting the tightest spreads for the biggest size.

  • ING : Tibra versus Nino
  • KPN : Caerus versus Optiver versus All Options (for two spots)
  • Unilever : Caerus versus Optiver
  • Tom Tom : Caerus versus Fluhalp versus 323 Trading versus Leopark (for two spots)

Difficult to predict the outcome. Caerus has build a solid reputation and Optiver has earlier bitten the dust in Ahold and Akzo recently. 323 Trading is slowly collection a lot of primary market maker roles and is always a serious outsider. We will have to be patient for three months for the results. The dark horse Fluhalp isn’t unknown at all, it’s a legal entity of Scrocca.

In Tom Tom there’s only one firm not forced to participate in the play off and qualified directly as pmm – All Options is safe while four others fight for two spots. Probably there’s a perfect valid explanation for this, but in last auction the pmm places in Tom Tom were taken by Optiver, Leopark and 323. This means All Options has at best applied for the pmm role somewhere in the running year (perhaps picking up the role Optiver dropped) – and as I have always understood the exchange rules you can’t be safe from a play-off procedure when you don’t perform quoting obligations all year long.

  • Update : there is a valid explanation. All Options hasn’t been pmm in TomTom from day one in the last year, but long enough (8 months) to have a serious quality score.

AEX Index

Euronext has created an extra seventh spot for primary market makers in de options on the AEX index. We have two new firms quoting all series including the long terms. A trader at Market Wizards signed, and the well known firm Liquid Capital will join AEX as pmm too. It’s the only spot Liquid is trading on Euronext Amsterdam. The liquidity providers in the AEX as of May 2nd are : Caerus, IMC, Leopark, Liquid, Market Wizards, Optiver and Tibra.

For some reason All Options left the pmm spot in the AEX. They’ll be busy with Mediq, Ten Cate and Brunel of course. Seriously, don’t recognize any trace of a coherent strategy at All Options. Then again, maybe there’s a perfect explanation for this.

  • Other news : CFTC versus Optiver case on hammering the oil : postponed until May 25th.