binck-bank-inlog-nlOnline broker DeGiro surprised everybody today. On national television they came with the news TOM’s smart order router (SOR) doesn’t work very well. In fact, the guaranteed “best execution” proved to be fake. To make things worse, apparently a HFT firm has seen enough time to benefit from the trades.

Research paper

The Dutch pdf can be found here – the Smart Order Router has been tested. English version will arrive today (Update: here). In illiquid stocks with high stock prices (Unibail. Solvay etc) a large order was send to the SOR. Similar to Michael Lewis’ Flash Boys the orders arrived at one exchange, after which the HFT traders were given enough time to trade on the other exchanges.

See pages 8 – 10 for interesting details and Bloomberg screenshots. The SOR managed to lose the best offer in the market on Euronext because it started lifting on TOM and Chi-X. It looks like they lifted the second best offer on Chi-x before lifting the lower offer on Eur0next. HFT firm made a quick buck by selling 113.30 on Chi-X and subsequently lifting 113.25 on Euronext. Does not look good.

Willem Meijer (TOM) loses his cool

TOM  and Binck would have a lot of explanation to do, one would assume. I know Willem Meijer as a cool, calm and collected guy. No such thing.  Instead of a mea culpa and let’s fix it – they are making a lot of noise. Still in denial.

  • It accuses DeGiro of market manipulation (seriously?).
  • “The large orders in illiquid stocks aren’t common so that’s why the SOR doesn’t work” (lol whut?!)
  • “The screenshots from Bloomberg are delayed with a few seconds.” (doesn’t matter in quiet stocks, does it?)

I would say the examples from DeGiro are exactly situations were the smart routing could prove it works at all. Nobody needs a smart order routing for 1000 shares of ING.

AFM starts investigating

Anyway, the finance watchdog AFM has started an investigation into TOM’s stock routing system. Meanwhile, TOM and Binck should be thankful they’re not living in the United States. Ripping off customers for few years wouldn’t only hurt your reputation in the US.


This whole clusterfuck by TOM puts some other statistics in another perspective. In september over 80% of the stock orders have been executed on TOM or Chi-X. Not strange at when you lose all bids and offers on Euronext to the HFT traders. And the average saving per order? Never believed them anyway..