Bad timing with Euronext’s market outage

7 May 2012

Political turmoil around Mediterranean sea. In Greece the coalition lost their majority to some nutballs. Another insolvent country voted for socialist Hollande. Market heading south early monday morning.

Not in Amsterdam. Euronext LIFFE moved a few servers in the weekend. Changed a few wires. Trading in index futures and options has been halted for most part of the day. An attempt to re-open around 11:00 failed miserably. No AEX futures and options until 15:00. Here’s the official explanation what happened.

In the meantime the market recovered completely. Investors with long index puts missed their opportunity to take profits. Anyone with long puts or short calls should head for the VEB to reach a settlement with Euronext. Again. This is going to cost ‘em some serious money.

Sad thing is they will never learn. Trading outage is business as usual with Euronext. Miscalculating settlement prices happend less than a year ago, twice. Heads would roll in any real company. It’s time to adjust the pricing models to include a new greek variable. Risk of Euronext failure.

29 Responses to Bad timing with Euronext’s market outage

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anonymous

May 7th, 2012 at 6:50 pm

I like the new Greek variable idea!!!

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anonymous

May 7th, 2012 at 8:08 pm

Heads would roll if they could be identified and if the labour laws allowed so, but then again its sort of monopoly, that too in europe, look west and see what french picked up, socialist hollande,

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08-05-2011 08:00

May 8th, 2012 at 7:25 am

The opening of AEX Index Future will be delayed.

Regards,
NYSE Liffe Market Services

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Cees Vermaas

May 8th, 2012 at 7:41 am

No worries, future on AEX will open at 8:45 CET

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anonymous

May 8th, 2012 at 9:33 am

The arbo-law (oh&s for anglosaxons) doesn’t allow heads to roll. It’s a health hazard.

And not just people with long puts missed their opportunity to take profits. The same can be said for people with (delta-hedged) long calls…

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against HFT

May 8th, 2012 at 1:59 pm

There is nothing blameworthy about what the high-frequency traders did. Market makers aren’t charities, and their algorithms were only saving their skins amidst extreme market turbulence. Their actions do, however, rather undermine the common argument that high-frequency traders bring wonderful benefits to the market through the liquidity they provide. That liquidity, as many have pointed out, has a rather ghostly quality and tends to vanish when needed most.

Also troubling is the way the CFTC and SEC report, in placing responsibility for the crash on Waddell & Reed, contradicted its own definition of liquidity: “buy-side and sell-side market depth, which is comprised of resting orders that market participants place to express their willingness to buy or sell at prices equal to, or outside of (either below or above), current market levels.”

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anonymous

May 8th, 2012 at 2:46 pm

The latest epithet for HFT is pretty noteworthy, ‘HFT has social utility equivalent to bunch of rats being let loose in your Granary

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anonymous

May 8th, 2012 at 2:46 pm

Delta-hedged long calls is of course equivalent to synthetic long put, put-call parity blah,
 

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anonymous

May 13th, 2012 at 3:02 pm

wow, thanks genius

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anonymous

May 13th, 2012 at 9:39 pm

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anonymous

May 14th, 2012 at 2:40 am

Bankruptcy is a result of “the malaise in the financial world.”, yah right, lol,

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anonymous

May 14th, 2012 at 2:40 am

I don’t quite follow, what’s so genius about put-call parity?

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anonymous

May 15th, 2012 at 12:08 pm

The Euronext platform still his problems. Loads of strategies (they dont dissapear at night) and free money if you create synthetics with wrong deltas. Will they ever learn it ?

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anonymous

May 15th, 2012 at 7:43 pm

Who freaking trades strategies on screen ?

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anonymous

May 15th, 2012 at 11:10 pm

here’s another moron for you,

Philippe Gijsels, BNP Paribas Fortis, says “if history repeats itself, we could see the Dow move to 100,000.”

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anonymous

May 16th, 2012 at 10:13 am

@7:43 retail investors that want to roll their short calls and puts to the next month

@11:10 that prediction is on the assumption we’ll get (hyper)inflation. Although (so far) unlikely, I wouldn’t call someone a moron for predicting it.

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anonymous

May 16th, 2012 at 12:35 pm

really, retail morons are rolling their calls and puts onto next month, this is truly getting to be a casino now,
 
assumption of hyper(inflation) is just that, stupid assumption, Fed/ECB has stated it loud and clear, repeatedly, 2% inflation target, unless that is explicitly changed, or break evens start showing something substantially different on long-term basis, pls lets just drop this stupid distraction of inflation getting out of hand, upside or downside,
 
so you think it’s not moronic to call Dow Jones 100,000 target, What’s your time horizon for reaching that mark ?

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anonymous

May 16th, 2012 at 4:13 pm

Yahoo….100.000 coming up. Heng Heng

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anonymous

May 16th, 2012 at 7:16 pm

So you quote someone, without actually reading his article, and call him a moron based on that? Now who’s the moron here?

Anyway, to answer your question, this is a quote from the article by Philippe Gijsels: “Want als de geschiedenis zich nog een keer herhaalt en we op een bepaald moment weer gaan vertienvoudigen brengt dit onze target voor de Dow over pakweg 25 jaar op 100.000.

Een groot deel daarvan zou kunnen worden verwezenlijkt door het wonder van samengestelde interest. Een ander door het iets minder leuke wonder dat inflatie noemt. Om aan een vertienvoudiging op 20 jaar te komen moeten we nominaal 12,2% per jaar stijgen.”

Central banks having an inflation target doesn’t mean inflation can’t go up. But if you believe central banks are omnipotent, be my guest.

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anonymous

May 16th, 2012 at 10:32 pm

yes its very moronic to even read the article with headline of Dow 100,000 .. what’s more moronic than to waste your time and head, filling it up with garbage,

So we had 30 years of Super Bubble, the current deleveraging is already in year 5 where we haven’t even reached the meaty party, and already we are talking of another Super bubble taking Dow 10 times in 25 years, where do people come up with this crap from, oh yes miracle of compound interest .. lets compound some interest off my ass .. or better still lets compound another similar super bubble when you were young enough to feed off your mum’s teets .. nky topped out above 40,000 … six figure predictions were the rage .. more than 20 years on .. it barely scratches five figures .. yes miracle of compound interest ..

a powerful central bank, willing and determined, can successfully ward off deflation .. that’s the main worry in a recession/deleveraging .. in such a tough delevering environment how can asset prices maintain their level without central bank liquidity is something you could explain ?

Greece is the latest example, people are withdrawing money directly and stuffing it under matteress, do you even comprehend how incredibly deflationary that is, how multiplier effect creates and destroys money/asset prices,

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anonymous

May 17th, 2012 at 12:27 pm

Euronext Liffe is closed….again.

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anonymous

May 17th, 2012 at 1:38 pm

Opened….and closed again.

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anonymous

May 17th, 2012 at 1:47 pm

All trades done during the opening of the Amsterdam individual stock options and Amsterdam Currency products at 14:30 CET will be invalidated

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anonymous

May 17th, 2012 at 4:02 pm

Only the amsterdam segment of Enxt is having problems, its a conspiracy………

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anonymous

May 18th, 2012 at 3:11 pm

and again!!!! i love it

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anonymous

May 18th, 2012 at 3:13 pm

Due to a technical issue trading in AEX (including the AMX & FMX) and Bel futures and options contracts is suspended until further notice.
All orders other than GTC’s have been removed from these markets.

NYSE Liffe Market Services

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Cees Vermaas

May 18th, 2012 at 3:32 pm

Bel futures will open at 16:35 (CET) and the option at 16:37 (CET)
Members are advised to check the status of all orders (including GTC’s).
The AEX (including the AMX & FMX) future and options contracts will remain suspended until further notice.
All expiries will continue as normal.

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anonymous

May 18th, 2012 at 3:37 pm

The AMX and FMX Index contracts will go into pre-open 16:40 (CET)
All other AEX contracts will go into pre-open at 16:45 (CET)
Members are advised to check the status of all orders (including GTC’s).
All expiries will continue as normal.

NYSE Liffe Market Services

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Euronext. Good with colours. - amsterdamtrader

May 20th, 2012 at 7:31 pm

[…] writing a post here is the search for a picture. However, sometimes the last picture says it all. Jeez, not this shit again. Thursday and friday parts of the option market in Amsterdam have been shut down again as a result […]

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