The current market panic is offering great potential for traders. Earnings estimates for market makers can be doubled easily for the year. The other side of the trading eco system, the voice brokerage firms – have a lot more difficulty earning a living. During this period of ultra high volatility it’s difficult to arrange large trades, and mistakes will cost you, dearly.
We do have a casualty of the latest drop : Amstel Securities decided to shut down their option brokerage shop in Amsterdam and all six option brokers subsequently lost their job. A foreign client in European stock brokerage refused to settle a trade, a broker’s nightmare and terrible expensive to liquidate in this market. Word is the client committed fraud with the account opening procedure and at least three other (foreign) brokers have been victimized. The experienced brokers losing their job have a good reputation in the market, and it’s a pity their operation is axed in order to cut the fixed costs at Amstel Securities.
It’s easy to connect the dots between the downfall of Michel Visser’s hedge fund and the closure of European stock and option brokerage – but this seems to be completely unrelated with this story. Besides, the financial watchdogs have confirmed Amstel as well as Winterflood was in good faith in doing the trades in 2007for Visser’s hedge fund Mercurius.
Amstel Securities is way bigger than brokering European option and stock trades. Brokering in the European bond market isn’t affected and the company is doing well in Asia, with a headcount of over a hundred in three offices in Jakarta, Manilla and Singapore. Meanwhile, in small town Amsterdam only three serious brokers are left over (Aespen, AFS, IWB), of which Aespen has already downsized early this year. It’s a serious discussion wether or not small brokers can survive without a powerful client base such as their larger peers in London.