Confusing times. Both TOM and NYSE Euronext claim victory after the court ruling on the AEX Index options today (Euronext, TOM). However, it’s not rocket science. The court has clearly decided in favor of The Order Machine, TOM.

Euronext bites the dust

The old exchange lost 30% of their market share to TOM in the AEX index options. Especially in the liquid daily AEX options the contender TOM has captured a large market share. Court ruled this is perfectly fine, as long as the ticker code is adjusted.

TOM is using the ticker code AEX for AEX options. They have to make up a new term for these options. In the product description they are still allowed to refer to the AEX Index. Four weeks to coin a new ticker code. ABC, INDX, 020X : it doesn’t matter what they will use, anything goes. Every trader will confirm, ticker code is completely irrelevant for trading.

The Germans

There are more consequences. The German rival exchange Eurex could add the AEX options to their product list (yes, with another different ticker code). Or the options on the French index, the CAC. TOM and Euronext could try to grab some of the massive volume in the Eurex index options on the DAX, Eurostoxx 50 or the SMI. Attracting flow and market makers providing liquidity will be crucial.

The transaction fees for option trading are still outrageous for retail investors, especially in the low priced out of the money options. Time to cut the fees, we have competition.

Link to court ruling : here (nl). Hat tip to Das Kapital (nl).

• AEX, Euronext, TOM