Voor de gezelligheidWholesale brokers AFS and IWB agreed to merge their operations. The firm will continue under the flag of AFS. The brokers from IWB will join their former competitors in the exchange building. No idea on the details on the deal, but expect to read it in the papers tomorrow.

Back in the good old days when every clown could make a fortune trading options, we had a dozen of brokers. Every serious market maker had their own brokerage unit as well as every bank. Aespen, Amstel, Binck, ProBrokerage, InterOptions, RIA, Sem, Kempen : the golden age.

The main job of these brokers is getting market makers, banks, hedge funds and institutions to trade large blocks of options with each other. And receive some commission. The spreads were large, so a lot of room for negotiating better deals.

The spreads have collapsed in the screen and the order flow from the banks has dried up. The large brokers in London play a slightly different game and will survive, but the Dutch brokers have a though time. This merger of AFS and IWB looks like a big cost cutting measure.

The Dutch brokerage landscape is getting empty. Hope the combined new entity will manage to survive – the brokers enjoy a good reputation in the market and AFS employs a fine research desk. Still, every merger goes with the risk of cutting some staff. This one is no different. The number of brokers employed by the firm could very well be just a few too many.

Jack
Jack