IMC buying Goldman

3 Apr 2014

Altijd paar dozen achter de hand houdenSuddenly a bucketload of news on IMC.

First of all, Wiet Pot and Remco Lenterman have called their old pals at Goldman Sachs. Seems IMC is bidding 30 million for the floor trading business at the big board in New York.

Maybe they’re keeping the specialists alive as main argument for HFT, it’s a kind of dinosaur after all. But one with lots of media coverage. Hard to say why IMC would like to expand in such a shrinking market – but they sure will have their reasons.

WSJ calls Lenterman CEO of IMC. Probably by mistake, as they aren’t short of CEO’s with Defares and Pot. On the other hand, it wouldn’t surprise me if @Lenterman takes over the helm at IMC someday.

Trouble in Amsterdam

Thursday the 27th of March was bonus day, and it was followed by at least half a dozen of resignations. Some high profile people left to spend more time with their garden.

A source insists “they left with a cloud of suspicion hanging over their heads” . They may be spending a year on gardening leave during the non compete clause – before joining a rival firm or starting their own.

After this the Managing Director trading Europe, Koen Huisman, was shown the door. As a former very successful bond option trader, he apparently was less gifted as a manager. Peter Principle at work.

While IMC is having great years in the USA and in Asia, the performance at the headquarters in Amsterdam has been disappointing for a few years in a row.

IMC Chicago developer bonus 2012

The developer bonus at IMC Chicago is also in, but these are last years numbers (bonus over 2012). The Y axis is thousands of dollars, and including the base salary. No names or initials, just a plain bar chart.

VOC Mentaliteit

102 Responses to IMC buying Goldman

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anonymous

April 3rd, 2014 at 9:05 am

orange bars?

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anonymous

April 3rd, 2014 at 11:41 am

for the sr management or for second source of data?

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anonymous

April 3rd, 2014 at 11:41 am

:)

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anonymous

April 3rd, 2014 at 11:42 am

you like fanta or some?

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anonymous

April 3rd, 2014 at 12:55 pm

Orange is the color of the Dutch. Might be a coincidence :-)

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anonymous

April 3rd, 2014 at 12:59 pm

Your site has become very slow to open after this post.

Is IMC blocking your hosting ISP ?

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anonymous

April 3rd, 2014 at 1:08 pm

yes, imc has outsourced the hacking to estonia, expect to hear from your respective hr soon

Jack, can you stop posting about imc pls, it’s just not worth it anymore, nothing about them can be proved one way or the other anyways, what’s the point

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anonymous

April 3rd, 2014 at 2:34 pm

anybody got transcript for

http://online.wsj.com/news/articles/SB10001424052702304157204579475553563821262

what has bart got lined up after Dicentra spectabilis

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anonymous

April 3rd, 2014 at 2:43 pm

Goldman in Talks to Sell NYSE Floor-Trading Unit to Dutch Firm
In Preliminary Agreement for Business Formerly Known as Spear, Leeds & Kellogg

By JUSTIN BAER And BRADLEY HOPE
Updated April 1, 2014 5:49 p.m. ET
Goldman Sachs Group Inc. is close to selling a once-iconic trading business based on the floor of the New York Stock Exchange for a fraction of what it paid less than 15 years ago, according to people familiar with the matter.

Goldman is in talks to sell the business, once part of Spear, Leeds & Kellogg LP, to Dutch firm IMC Financial Markets, the people said.

Goldman paid $6.5 billion in 2000 for the business, which included a division that puts buyers and sellers together on the floor of the NYSE. A final deal isn’t imminent, though the companies are discussing a price of as much as $30 million, the people said, a reflection of the dramatic changes that have transformed U.S. markets since Goldman made the initial deal.

Remco Lenterman, chief executive of IMC Financial Markets, said the company doesn’t “comment on rumors or speculation.”

Goldman bought Spear, Leeds when it was the largest so-called specialist firm on the NYSE, making it a major force in U.S. equities trading. Its traders, called specialists, provided quotes for buyers and sellers of stocks throughout the day to facilitate trading. They would capture the spread between bids and offers on thousands of trades a day and were obligated to step in with their own capital when there were big imbalances.

Soon after the acquisition, however, stock trading began a rapid migration away from the floor-based model. Human traders were no longer fast enough to compete with computer algorithms designed to buy and sell in fractions of a second.

Designated market makers still maintain a presence on the floor of the New York Stock Exchange, but the traders themselves are responsible for a sliver of trading compared with the computerized systems executing orders.

As the profitability of the business declined in recent years, banks have begun to unload their market-making businesses to firms that had built up powerful electronic-trading capabilities.

In 2011, Bank of America Corp. sold its market-making business to Getco LLC, a high-frequency trading firm that merged with Knight Capital last year to form KCG Holdings Inc. Virtu Financial Inc., one of the largest high-frequency firms, also became a designated market maker in 2011 after buying the business from Cohen Capital Group.

IMC Financial Markets, a unit of IMC Group B.V., fits into the mold. The firm, founded in Amsterdam in 1989, is an electronic market maker on 90 exchanges around the world, according to its website.

Goldman’s plans to sell the business also comes amid a broader review of the role high-frequency trading firms play in the marketplace. The Federal Bureau of Investigation said Monday it was investigating whether high-speed traders were trading ahead of other investors based on information that other traders can’t see. The New York Attorney General has opened a probe, and the Securities and Exchange Commission has “a number” of ongoing investigations related to high-frequency trading and market structure, according to testimony on Tuesday from SEC Chairman Mary Jo White.

“It might make sense to get out of the market-making business because the profits aren’t there anymore, the risk is high and the regulators are looking at it closely,” said Bernard Donefer, a Baruch College and New York University professor who studies capital markets. “Maybe they see the handwriting on the walls and want to concentrate their money on other lines of business.”

Goldman’s intention to sell the business was first reported by the Financial Times on Tuesday.

Write to Justin Baer at justin.baer@wsj.com and Bradley Hope at bradley.hope@wsj.com

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anonymous

April 3rd, 2014 at 2:46 pm

Dicentra Spectabilis is http://nl.wikipedia.org/wiki/Gebroken_hartje , means Little Broken Heart

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anonymous

April 3rd, 2014 at 2:47 pm

why would remco be the ceo, where is rob n pot going

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anonymous

April 3rd, 2014 at 2:51 pm

bart, that was nice one on Dicentra Spectabilis, any hidden meaning for Vinca minor

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anonymous

April 3rd, 2014 at 2:59 pm

Vinca minor is http://nl.wikipedia.org/wiki/Kleine_maagdenpalm – little virgin palm. And of course “the roses” is also tongue in cheek. It is slang for “greetings”. Grappig Bart, tovo

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anonymous

April 3rd, 2014 at 3:01 pm

The roses means greetings or bye bye

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anonymous

April 3rd, 2014 at 3:59 pm

well, atleast somebody still had some class in imc, alas, roses for him

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anonymous

April 3rd, 2014 at 5:19 pm

Funny name Wiet Pot. Could also be a name for a Dutch coffeeshop.

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anonymous

April 3rd, 2014 at 5:27 pm

@2:43 The integrity of the whole market is being questioned, levitating on credit and central bank debt. HFT will thrown under the bus and scapegoated to preserve the illusion that the market is stable and has been ‘cleansed.’

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anonymous

April 3rd, 2014 at 5:33 pm

what’s with all these sceptics moaning and complaining about credit and central bank debt, we are in midst of huge credit delevaraging cycle, the time to complain was pre-07, not in bloody ’14, and as for central bank debt in absolute size, well that’s just missing the whole point about debt/gbp, velocity of money and ratio of base money/broad money

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anonymous

April 3rd, 2014 at 5:34 pm

The Death of Money: The Coming Collapse of the International Monetary System

Bankers = Bankers + HFT Page 267, our friend Jim Rickards states:

“Financial avalanches are goaded by greed, but greed is not a complete explanation. Banker’s parasitic behavior, the result of a cultural phase transition, is entirely characteristic of a society nearing collapse. Wealth is no longer created: it is taken from others. Parasitic behavior is not confined to bankers; it also infects high government officials, corporate executives, and the elite societal stratum.”

“The key to wealth preservation is to understand the complex processes and to seek shelter from the cascade. Investors are not helpless in the face of elite decadence.”

http://www.amazon.com/dp/1591846706/ref=cm_sw_su_dp

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anonymous

April 3rd, 2014 at 5:35 pm

And hft is not being thrown under the bus, just like other friction cost, they are being dealt appropriately, they have no business inserting themselves between buyers and sellers, out they go

market is very stable and much cleaner with all these illegal and legal front running being rooted out

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anonymous

April 3rd, 2014 at 5:45 pm

google rickards, other names showing up are schiff, rogers, faber, so that should say something to even a newbbie

rickards is a well known skeptic, though interestingly his hedge fund is 100% long, it’s interesting how people go about living in dual worlds, one inside their head with all their fantasy ideas and the other real world where their real world positioning is rather visible and diametrically opposite

elite decadence is obviously extending from well bid asset prices, just sit long equity markets here

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anonymous

April 3rd, 2014 at 5:48 pm

i think your missing the point about deleveraging contracts balance sheets. we are in a credit/growth model. money has to be perpetually created to pay the interest off the previous debts. households and businesses have hit structural limits to service those debts hence no growth. interests rates suppression is an artificial intervention mis-pricing money

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anonymous

April 3rd, 2014 at 5:56 pm

@ 5:45 The international monetary system has collapsed three times in the past hundred years, in 1914, 1939, and 1971. Each collapse was followed by a period of tumult: war, civil unrest, or significant damage to the stability of the global economy. We are only 40 years into the current financial architecture – it works until it doesn’t. Not sure what real world your in but having traveled to Greece, Spain and Cyprus 10 years ago and recently – its changed.

@ 5:35 there is way to much financialisation, not enough wealth creation – thats not stable. The finance industry is hooked on keeping the intermediary role HFT or otherwise going. It will have to implode until the next reset and we start again.

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anonymous

April 3rd, 2014 at 9:45 pm

this is not nice to say, but Koen Huisman was the classic example of an incompetent IMC manager/ yes man. The damage he caused to the company can be quantified in >10 mio in addition to the departure of key personnel and know-how. As for his trading track record, this was only for few years and it is impossible to know if he was a talented trader or just a lucky half wit. Fact is that his trading approach is death since years and has been replaced by something completely different. The most surprising thing is, however, the fact that Rob promoted him to head all European trading activities and even made him a partner when it was quite clear at the beginning that he was simply clueless.

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anonymous

April 3rd, 2014 at 10:51 pm

define ‘deleveraging contracts balance sheets’

you have got the understanding other way round, it’s not that households and businesses have hit structural limits to service those debts hence no growth, instead there is no growth due to all this delevering exercise, everybody is gone in insurance protection mode, and with this no growth, existing debts are harder to pay-off, thus entering in greek style deflationary debt spiral, where deflation and negative growth rate causes debt/gdp to rise

remember, you can always re denominate or inflate away debt, so all this noise about debt burden is just distraction, compelling, but distraction in its real world effect

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anonymous

April 3rd, 2014 at 10:55 pm

as for rates suppression, this is def widely misunderstood by non-rates people, the way to get rates up is to first bring them down, provide monetary accommodation, get the growth going, get the inflation going and then you would have long rates go up and followed by short rates, this is exactly what bernanke/yellen have done, they saved the world from 30’s style depression, be thankful to them

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anonymous

April 3rd, 2014 at 11:27 pm

again, stop with all this bs skeptic ‘it works until it doesn’t’, when it doesn’t work, we’ll figure out how to make it start working again, you can’t kill human ingenuity and the will to improve lives, for themselves, and possibly for the planet around us

yes, greece, spain and cyprus have changed, so has egypt, ukraine, afghanistan and iraq, listen there always be troubled places, doesn’t mean i should start taking medicines to cure my depression about it, cheer up man, think of solutions, not the problems, welcome to the real world

define ‘financialisation’

yes, financial sector needs to shrink massively, earnings for financials topped out at 40% of S&P back in ’07, we have come long way and there is plenty of road still ahead, what’s with your glass half empty approach?

as for wealth creation, yes it’s much too easy to create gdp, much harder to create net wealth for masses, china is a good eg; you can also create wealth at the expense of debt, italy is a good eg of 180% private wealth vs 120% govt debt vs germany’s 120% private wealth and 60% govt debt; of course the numbers have changed since

but all this problems are known and being resolved, nothing has to bloody implode mate, it’s not some supernova blackhole, you just have to work on creatively solving our problems, not write some dumb gloom, boom and doom column to feed dumb people like you

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anonymous

April 3rd, 2014 at 11:33 pm

all this smart trading strategy analysis of koen, why don’t you use your analytical powers to print some mios for imc rather than waste it on their dumb mgmt politics? once you print lots of mios, rob n pot can then make you their koen 2 and you might finally start seeing that all this analysis is complete bs, it’s a jungle out there, you either get the green grass or you get eaten by the lion

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Remco supporter

April 4th, 2014 at 5:59 am

Remco would make a great CEO for IMC:

– He has a fantastic personality, is approachable, listens, never talks down to people
– He understands HFT better than Rob or Wiet and as such can RUN the business whereas Rob and Wiet leave it to the 3 heads of trading to run the business (dangerous)
– He is of good standing in the FS industry

I vote Remco for IMC CEO !

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anonymous

April 4th, 2014 at 7:05 am

I hear this talk of Koen costing 10mil, to put things in perspective, anybody with IMC’s profit figures for 2013-14?

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anonymous

April 4th, 2014 at 12:40 pm

i vote for remco too, rob n pot, where are your votes on this?

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Nobody

April 4th, 2014 at 12:54 pm

Guess Remco is posting here under Remco Supporter

Remco could not get the CEO role for the Chicago office. No way he become IMC CEO. His personality is too absurd and rough. And he is a spoiled rich kid. Rob dont like that.

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Anonymous

April 4th, 2014 at 12:56 pm

Who r the 3 heads of trading at IMC

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anonymous

April 4th, 2014 at 3:54 pm

the three heads of trading are fifer, fidler and practical

if rob doesn’t like remco, why he is being paid, pot is behind his gs buddy?

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anonymous

April 4th, 2014 at 6:29 pm

Remco has a personality which is too absurd and rough???? What are you smoking? His personality is anything but that. Clearly you don’t know him otherwise you would not write such nonsense.

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anonymous

April 4th, 2014 at 8:23 pm

do you think the next CEO at IMC is going to be voted online? Give us a break and enjoy the weekend

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anonymous

April 4th, 2014 at 11:26 pm

yes, sure, we just need two votes, rob n pot, wat say?

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anonymous

April 5th, 2014 at 12:22 am

The floor trading equities business is a highly antiquated model. Most of the NYSE pits have now become venues to host parties amid what used to be a busy center.

The new incoming guys will be complete misfits in the culture of these super fast electronic Dutch market makers.

Very few synergies. Sure it might buy them a few trading/exchange licences.

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anonymous

April 5th, 2014 at 1:56 am

can imc make money of those trading/exchange licenses? what are these licenses anyways?

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Anonymous

April 5th, 2014 at 5:18 pm

I heard Bart was joining up with some people that left the same day. Can anyone confirm? Surely IMC lawyers are going to be unleashed for non solicit?

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anonymous

April 5th, 2014 at 5:38 pm

if they left the same day the non solicit by definition does not apply.

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anonymous

April 5th, 2014 at 8:07 pm

but imc’s lawyers still apply, watch out

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Anonymous

April 5th, 2014 at 8:11 pm

If IMC finds anything that shows they planned this while still employed, then the non solicit certainly comes into play. If they were not smart about keeping their distance from each other, then they’re in for a long legal battle

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Anonymous

April 5th, 2014 at 8:14 pm

Most non solicits also state that you cannot solicit anyone who has worked at the firm within the last year. So, it doesn’t matter if they’re no longer at IMC and they quit on the same day.

Also agree with anonymous that IMC’s lawyers still apply :(

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anonymous

April 5th, 2014 at 8:30 pm

why doesn’t rob n pot worry about making money and not wasting it on expensive park avenue lawyers

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anonymous

April 5th, 2014 at 9:32 pm

‘So, it doesn’t matter if they’re no longer at IMC and they quit on the same day. ‘

this is false, you can check with a lawyer. The non solicit means that a former employee solicits somebody who is still working there to leave. If they leave the same day it cannot be proved (with 99.9% of confidence) that one solicited the other to leave. The non-solicit does not forbid two former colleagues to work together if each of them decided to leave by his/her own will. The only card IMC can play is the non-compete, however, this not enforceable in Europe and in the US if the departing employees are not payed by IMC.

Just check the history, was there ever a case where IMC sued somebody for infringing non-compete or non-solicit? Probably not. It is a poker game and IMC has no interest to start a legal process because if it loses (most likely outcome) then everybody knows for sure that a non-compete has no value.

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Anonymous

April 5th, 2014 at 9:48 pm

Ya, that’s why someone said if they were not smart about it and left a trail (ie. Email, text messages, interviews), then they are in trouble. And remember, IMC has to prove nothing. They just drag it out in litigation and keep them out.

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anonymous

April 5th, 2014 at 9:48 pm

imc should have some confidence in itself, some 2-bit employees leaving shouldn’t mean drain of money to lawyers to defend their increasingly difficult territory anyways

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anonymous

April 5th, 2014 at 9:52 pm

what’s the cost of dragging it out vs benefit of it, one benefit is discouraging existing employees plotting to start their own venture, hotel california approach, is that defensive approach better than aggressive approach of moving ahead with their own business while battling existing competitors rather than worrying of past employees being new competitors

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anonymous

April 5th, 2014 at 10:02 pm

‘ IMC has to prove nothing’
no they have to prove everything as their jurisdiction (Holland) is a state of right, i.e. you are innocent as long as somebody does not prove the contrary.

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anonymous

April 6th, 2014 at 12:34 am

completely offtopic, any idea how these Israeli firms are doing now? this article from a few years ago make it seem like they’ve been on a good run.

http://www.ynetnews.com/articles/1,7340,L-4015076,00.html

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Anonymous

April 6th, 2014 at 1:09 am

Anyone know the names of all who quit? Or who Bart is forming a team with?

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anonymous

April 6th, 2014 at 1:39 am

3 youngsters who started together 4 yrs in. not so interting.
Bart, driver in IMC’s transition to automated hft.
Mladen, aussie in for 10+yrs was in amsterdam for last 2 yr. Previous, “head of fixed income” left. after real FI team left yr earlier
Koen got sacked after all this
Girl in legal and in hr.
Wednesday there will be big update in Amsterdam office

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Anonymous

April 6th, 2014 at 1:47 am

> 3 youngsters who started together 4 yrs in
Not 4,more like 8

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anonymous

April 6th, 2014 at 1:00 pm

why do people have to resign all on same day and raise suspicion around themselves, shouldn’t they be more discrete about it?

there are lot of names in the article on the israeli algo market, wonder if they were all found out through their linkedin profiles : )

is there a tel-aviv trader blog, that probably is more juicy than this shit hole

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anonymous

April 6th, 2014 at 2:39 pm

who cares about tel-aviv and israeli market… it is not significant in the industry

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anonymous

April 6th, 2014 at 3:42 pm

of course not, same holds true for dutch market, but we still discuss dutchchies for their activities in east and west, duh

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Anonymous

April 6th, 2014 at 5:48 pm

There’s actually less suspicion if you do it on the same day on bonus payout day. As stated before, now IMC has to find evidence that they were planning it while still employed.

Anyone know Bart’s next destination?

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anonymous

April 6th, 2014 at 6:24 pm

his garden

it’s no so suspicious if set of people leave over couple of month’s period after bonus pay-out, they all just make a set of excuse and create an image that they are all leaving independently to pursue mba, charity etc

all of them quitting on bonus day means they are all upto something, either together or at competitor house, what a dumb move for set of hft algo trading geniuses

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anonymous

April 6th, 2014 at 8:38 pm

as long as they do not violate the non-compete (which only happens if they are paid during the gardening leave) they can all leave the same day as this does not mean that they breached the non-solicit. They have the legal right to setup something together because each of them had a valid reason to leave and was not solicited by anybody else.

It is legally more complicated if one leaves and let’s say after few months another leaves, etc. Because then one can argue that the first one convinced the second one to leave in order to work together. So the move was actually smart.

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anonymous

April 6th, 2014 at 10:16 pm

http://www.bloomberg.com/video/katsuyama-narang-lewis-debate-speed-trading-~tZW9uHxRPm4Un24I0pyTg.html

anybody wanna speculate intelligently on manoj vs brad on deterministic 350 microsecond delay

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anonymous

April 7th, 2014 at 6:55 am

Geez, a lot of comments on whether IMC’s Bart and some colleagues are allowed to leave together / not leave together, start a new venture together or not etc. Legally they can all leave IMC together and start a new company competing with IMC, with no issue – it’s a free market. They will come unstuck though, if they entered into a termination contract with IMC where IMC paid them a ton of money and they agreed to stay out the market for a period of time. We can assume this is true since Bart is on “gardening leave” – if he resigned without a termination contract, he would not be on “gardening leave”

A grey area would be if Bart spends his “gardening leave” time putting together a new business to launch when his gardening leave period expires.

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Anonymous

April 7th, 2014 at 1:57 pm

I think it’s clear that they can surely start up or join a rival upon completion of their non competes. The problem is if IMC can prove that they planned this while employed or during the non compete.

This is all speculative hyperbole; I’m sure no one here is defending IMC’s inevitable actions.

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anonymous

April 7th, 2014 at 2:26 pm

It is just a coincedence, they will not start something new together. And if any of them applied and washired (agreeing to start a year from now) before resigning, no issue

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anonymous

April 7th, 2014 at 6:16 pm

@ 1:57 pm

I don’t believe IMC could stop people discussing / planning a new business venture whilst being employed at IMC. Freedom of speech would allow this. The issue would be more of not performing the duties you’re paid to perform during office hours, and well, once you’ve left a company there’s not much that can be done in this regard.

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anonymous

April 7th, 2014 at 9:46 pm

There is no way to stop people from planning or leaving or doing something together, fortunately we leave and work in a free society. The only concrete measure IMC can take is to delay their activity by paying a salary during the gardening leave (deferred bonus does not count). If a salary is not perceived the non-compete cannot be enforced, this is common knowledge in the meantime.

And by the way, if it turns out that the employees left for a good reason, a judge can declare void the non-compete (even if IMC is ready to pay during the gardening leave). The fact of firing Koen Huisman after the departure can be interpreted as evidence that the employer committed an error and people left for a good reason. It was smarter for IMC to fire this incompetent manager a bit later so that no connection with the departures could have been established.

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anonymous

April 7th, 2014 at 11:14 pm

that’s a bit strong interpretation, no, koen being fired due to few people leaving, were those people that good, did they leave because of koen, would they have stayed if koen would have been removed before?

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anonymous

April 9th, 2014 at 4:08 am

http://online.wsj.com/news/articles/SB10001424052702304819004579490030481110264

Goldman Mulls Closing Dark Pool
Executives Have Broached Closing Sigma X Trading Operation

By BRADLEY HOPE, JUSTIN BAER and SCOTT PATTERSON CONNECT
Updated April 8, 2014 10:44 p.m. ET

Goldman Sachs Group Inc. GS -1.26% is considering shutting down one of the world’s largest private stock-trading venues, according to people familiar with the matter.

In conversations with market participants over the past several months, Goldman executives have broached the subject of closing its so-called dark-pool trading operation, known as Sigma X, the people said.

Goldman executives are weighing whether the revenue that the firm generates from operating Sigma X is worth the risks that have been highlighted by a series of trading glitches and growing criticism of dark pools, the people said.

No decision is imminent, and Goldman could keep the business, according to the people.

A move to shutter one of the biggest dark pools could compel other big banks to take similar steps, potentially changing the way buy and sell orders from big investors course through the markets each day.

Dark pools are trading venues where investors are granted a greater degree of anonymity than in the public markets. About 14% of stock trading took place in dark pools in January, most of it routed through entities run by big banks, according to Rosenblatt Securities, which advises institutional investors. Goldman’s consistently ranks among the top five dark pools in the market, according to Rosenblatt.

The dark-pool business has hit a rough patch lately. Competition has increased in the already fragmented market as new dark pools have emerged. A recent spate of technological glitches in the stock market, meanwhile, underscores the risks that come with operating private trading platforms.

Last month, Goldman acknowledged that Sigma X suffered a pricing malfunction in 2011 that resulted in customers not receiving correct payments for transactions. The errors were related to market volatility between Aug. 1 and Aug. 9, 2011, according to a copy of a letter to an institutional investor reviewed by The Wall Street Journal. Goldman sent checks to customers to reimburse them for losses, according to institutions that received the letters.

Another headwind for dark pools came last week with the publication of a book by Michael Lewis on high-frequency trading that fanned the debate over whether dark pools give certain investors unfair advantages. Regulators last month began ramping up scrutiny of brokers and dark pools, and since Mr. Lewis’s book came out, states have vowed to look into the matter as well.

The Financial Industry Regulatory Authority, meanwhile, has opened an inquiry into the way brokers route customer orders and how they use their own dark pools in executing trades. Finra sent a letter to brokers last month asking for detailed answers on its order-routing practices, according to brokers who received the letter.

Stock trading is a big business for Goldman, bringing in $7.17 billion in 2013 excluding accounting charges. Goldman doesn’t break out revenue from operating Sigma X. Among the largest dark pools are those operated by Barclays PLC, Morgan Stanley and UBS AG, according to Rosenblatt.

Goldman has operated Sigma X since 2006. But recently it has become an advocate of market changes. Gary Cohn, Goldman’s president and chief operating officer, published an opinion piece in the Journal on March 20 that called for improvements to reduce the risk of technology failures and level the playing field for investors.

In an internal document sent to employees the same day the piece was published advising them on how to address questions about it, Goldman highlighted its relationship with an upstart trading venue called IEX Group Inc. In the message, Goldman said “While we think that a regulatory response may be needed to address these market structure issues, it would be best for the overall market if IEX achieved critical mass, even if that results in reduced volumes in our U.S. dark pool, Sigma X.”

Less than two weeks later, Mr. Lewis’s book, “Flash Boys,” was published. The book presents IEX as heroes taking on an industry in which markets are rigged to benefit exchanges, brokers and high-frequency traders at the expense of ordinary investors. The IEX platform uses a speed bump to level the playing field between fleet-footed and ordinary investors.

Goldman’s debate over Sigma X could be part of a broader effort to pare back on businesses Goldman doesn’t consider core to its position as a brokerage firm for institutional investors, according to the people familiar with Goldman’s discussions.

The firm also appears to be trimming its electronic-trading businesses. The bank is in advanced discussions to sell a market-making business based on the floor of the New York Stock Exchange to IMC Financial Markets, a Dutch high-frequency-trading firm, for as much as $30 million, according to people familiar with the discussions.

Write to Bradley Hope at bradley.hope@wsj.com, Justin Baer at justin.baer@wsj.com and Scott Patterson at scott.patterson@wsj.com

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anonymous

April 9th, 2014 at 10:32 am

A sunny day at IMC Amsterdam?

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anonymous

April 9th, 2014 at 12:18 pm

what’s up now at imc, why can’t rob n pot run their ship little bit nicely and fairly, so much moaning and complaining from imc crowd, this is just painful

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anonymous

April 9th, 2014 at 12:52 pm

nobody is complaining, what are you talking about?

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anonymous

April 9th, 2014 at 1:04 pm

IMC Amsterdam doing large lay off again today

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anonymous

April 9th, 2014 at 1:39 pm

yes, that sounds like singing praises rather than complaining

yes, we all know that imc is aweful and screws people over and lays them before bonus round, enough already, stop all this moaning, it’s way too repetitive

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anonymous

April 9th, 2014 at 1:40 pm

why can’t these layoffs be scattered during the year rather than make them all at the same time

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anonymous

April 9th, 2014 at 3:03 pm

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anonymous

April 9th, 2014 at 4:35 pm

reading that story about Jump, so the employees share pay of 32 mill while the owners/shareholders are left with 6 mill between them…taking those numbers at face value it sounds like a horrendous deal for the owners…unless the traders have significant skin in the game of course

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anonymous

April 9th, 2014 at 5:34 pm

or jump brings very little to the table in terms of contribution to profits and those profits can be replicated at any other shop with ease, so employee gets much higher payout

give some credit to the owners/shareholders, they wouldn’t leave any money on the table, also they are long term greedy unlike short termism at imc etc

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anonymous

April 9th, 2014 at 5:35 pm

a good eg of long term greedy is 10% of 100 mio vs 50% of 10 mio

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anonymous

April 10th, 2014 at 11:33 am

how many have been fired from IMC?

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anonymous

April 10th, 2014 at 4:07 pm

few % of staff has been fired, this is default for bonus month, next topic pls

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anonymous

April 10th, 2014 at 4:20 pm

Nope, not normal to fire >10% in one day.

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anonymous

April 10th, 2014 at 5:45 pm

How did you conclude few % is >10% ?

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anonymous

April 10th, 2014 at 5:53 pm

so they fired 60 people in one day?

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anonymous

April 10th, 2014 at 6:22 pm

no the notional should be the staff in Amsterdam, say 200-300, so 20-30 gone? sounds like not a small number, but given its IMC, it ain’t high, next topic, plsss

rob n pot, for coming year get rid of few people every month, it’s tiring to see your people complain so much every bonus time, also try to put in their contract that they are banned from complaining on this site

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anonymous

April 10th, 2014 at 6:46 pm

23 sacked indeed

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anonymous

April 10th, 2014 at 6:57 pm

Jump has a different corporate structure. K1 structure where traders dont get a W2 but part of profit in the form of a K1.

IMC and Optiver are W2 firms. Very different setup.

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anonymous

April 10th, 2014 at 10:17 pm

What about the source of pure liquidity these days? Last I heard when they are not busy firing people the rest are resigning.

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Firing spree at IMC Amsterdam - amsterdamtrader

April 10th, 2014 at 10:42 pm

[…] anonymous: 23 sacked indeed [...] […]

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anonymous

April 11th, 2014 at 12:33 am

anyone has more details on workings of K1 and W2>? google probably would be time consuming for this query

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anonymous

April 14th, 2014 at 7:57 am

SEC seems to ban some HFT players – with the Goldman buyout, is Wheatpot not trying to circumvent that IMC is among the unlucky ones?

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anonymous

April 14th, 2014 at 3:03 pm

rephrase pls

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anonymous

April 14th, 2014 at 4:27 pm

I was just speculating if Pot is maybe trying to protect IMC from getting banned by SEC. The logic for this would be that if IMC got blocked from trading then the newly acquired and integrated floor trading business would get blocked with it as well, which is not what SEC wants to achieve. All in all, with the specialist mms on IMC board, it would be more difficult for SEC to stamp IMC as a bad boy hft bloodsucker.

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anonymous

April 14th, 2014 at 5:18 pm

nice scenario analysis, don’t think SEC or anyone is going to blanket ban or clean sheet the entire company’s business, it’s like to be cherry picking of lat arb/flash order that are likely to be target of censorship, time will tell

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anonymous

April 15th, 2014 at 5:48 pm

Being DMM gives you a huge advantage trading NYSE. May not be worth 30 mio but you get:

-29 cents/100 shs rebate as long as you are on one side of the BBO 10% of the day
-Parity execution where you can jump the line and get a cut of any fills even if others are ahead in price/time q
-To claim you are a regulated market maker who provides continuous liquidity and have your logo on TV all the time

GS has DMM in top names like BAC and PBR where priority and rebate are a huge edge. NYSE toxicity is pretty decent too, lots of natural flow still routes there out of tradition/habit vs. getting picked off non-stop on BATS or whatever. They have negative obligations like helping to offset imbalances, and you have to spend money to keep a floor presence but overall could be a good deal for them if they keep headcount down and don’t take a bath on all the shitty names that come with the deal.

DMMs can stream algo quotes into the book. It’s not like they have to hire 50 Vinnys to run this operation, just a few guys to babysit things on the floor and look good on TV.

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anonymous

April 15th, 2014 at 6:21 pm

can you please elaborate on Parity execution, it seems not fair to get such a priority in the queue?

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anonymous

April 15th, 2014 at 6:57 pm

http://www.nyse.com/pdfs/fact_sheet_parity_priority.pdf

yes gives a big advantage on names with a large book and given higher rebate DMM can withstand more negative selection and put up better prices than other members

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anonymous

April 15th, 2014 at 7:04 pm

these are those kind of unethical advantages which have been there for 40+ years and nobody ever criticized, but HFT companies are blamed…

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anonymous

April 15th, 2014 at 7:28 pm

yeah no shit the guys behind the media tirades are a set of dunces comprised of dinosaur brokers, hedgies who want to trade huge size w/o price impact, and conspiracy theorists like Eric Hunsader who are basically a step away from Alex Jones. they claim HFTs are responsible for every big move in the S&P like a bunch of dudes with small capital and low risk tolerance can bully the most liquid future around multiple percentage points.

they obsess over someone being able to arb or quote fast and ignore actual market structure issues because they’re clueless and it doesn’t fit their world view. they hate exchanges like BATS which provide a relatively level playing field due to their association with HFT firms, yet completely ignore a market where a select group can literally jump the line and receive better economics on trading than other users.

now I don’t know the economics of the DMM business. they do sometimes have to provide liquidity at disadvantageous times so it may be a fair trade off. in a stock like BofA it’s probably unfair, but they might lose a lot having to be on the book in garbage thinly traded companies.

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anonymous

April 16th, 2014 at 1:42 am

is there a censor for ‘m0aning’

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anonymous

April 16th, 2014 at 1:42 am

moaning

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anonymous

April 16th, 2014 at 10:06 am

what are the high frequency algorithmic rules for ‘Your comment is awaiting moderation’

if you don’t know the economics of the dmm business, wouldn’t it be wise to put up that disclaimer first and then launch into your moaning and complaining

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anonymous

April 21st, 2014 at 2:13 pm

you have come to the right place, this blog is full of self-made geniuses, unfortunately you have to pay up bid-offer spread to avail of any useful services

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