The greatest joy of competition for customers is a drop in prices. It has taken a while, but finally we’re getting somewhere. Euronext announced today a fee rebate program for AEX index options (daily, weekly and monthly options). The fee for index options above a certain threshold will be lowered with 100%.

No more expenses on trading fees, how wonderful. Euronext has got to do something to stop the volume migrating to TOM. Both venues have split the market share in a perfect 50/50.

Absurd threshold

This threshold, you ask? The threshold is 130.000 contracts per month. You have to pay for the first 130.000 contracts, but the next contracts are for free. I kid you not. If you’re trading 130.000 contracts in the AEX option market, you’ll be a big shot with a market share of 20%. That’s not impossible, if you’re a trading machine like Timber Hill. They won’t really care about a few hundred euros a month.

This move isn’t aimed at traders or market makers. Maybe DeGiro can benefit. Anyway, reaching the threshold is one thing, but really making a difference is another (like trading 200.000 lots).

  • Euronext notice on fee rebate AEX options

High latency trading with Binck

Speaking of DeGiro. The DeGiro versus Binck and their sloppy order router has received even more attention today. The anthropologist Alexandre Laumonier has been checking the time stamps of the order confirmations from the test trades last December.

Laumonier has been visiting the physical locations of the venues.  TOM and Chi-X in Slough and Euronext in Basildon – both in London but some 55 miles apart. He’s flabbergasted by a simple question : how on earth is it possible TOM’s order router needs 17 milliseconds for a round trip over such a short distance? When you’re fast you can do it in 0.335 milliseconds for a single trip. It’s the same as driving from Amsterdam to Abcoude and taking six hours to arrive (usually it takes 25 minutes). That’s strange, even with traffic jams it shouldn’t take such a long time.

TOM responded the regular retail flow doesn’t need execution on multiple exchanges – so latency arbitrage is very uncommon. That’s true, but still a strange defense. Why need a “smart order router” in the first place? It’s like selling a 4X4 SUV which breaks down as soon as you leave the road – claiming it’s not an issue because customers never leave the paved road.

Another good gamble with the weather

Speaking of Abcoude. Next Saturday June 6th will be the Financial Football tournament. Just like every year, it’s going to be a sunny day with great weather to play some friendly matches. If you’re not playing – it’s good to enjoy a few drinks in the sun. Maybe a good spot to recover if you’ve been participating with the open outcry trading reunion drinks on Friday the 5th in Dante. Sponsored by Better Options. More information on twitter, ask Cat or find De Optiebeursvloer on Facebook.

New website brokerdealer.nl

The football tournament will be organized by Bennington. They have started a good financial blog together with Maarten Kalff (former Optiver) and Jan de Bolle (former Flow Traders). It’s an ambitious website with a nice url, and while it has got a Dutch extension everything is in English (and way better English than this website). Be sure to have a look.

Headoftrading.com

Another new website in the space of securities, front office and backoffice is headoftrading.com. It’s part of a bigger media shop, and have to admit the url is the best part of the website for me. The regulatory burden and back office side of trading hasn’t really got my interest. But if it’s your niche, it’s probably the place to be.

Their sister website is ISS-mag.com – more broad news on the securities industry. Strange enough they report today the news IMC Financial Markets has become e-specialist on the AMEX. Weird, as it’s news from a month ago. Haven’t written anything about it. No clue what a e-specialist is doing and why it’s worth a press release.

Jack
Jack