Jongmans to Flow, CTC record quarter
ABN AMRO Clearing Bank is a household name in the trading industry. For trading firms, it clears 2.4 billion trades a year, on 90 exchanges. It’s the largest clearing bank in Europe. In fields as small sized market makers the bank has a monopoly. They would ditch the small clients if they could.
In the world, ABN Amro Clearing Bank (AACB) ranks as the number three (according to AACB). Matter of definitions, difficult to point out the number one and two. With prime brokerage business, Goldman Sachs and Morgan Stanley. With FX there’s Citi and JPM.
From CEO to CFO
Of course, AACB is part of ABN AMRO. But the CEO of the clearing bank isn’t middle management. It has more than three times more employees than Flow. The CEO announced last Friday to leave the bank. Marcel Jongmans will be CFO at Flow Traders. That’s not immediately a promotion. The pay will be a lot better. Though compensation in shares isn’t what it used to be. Stock near all-time lows.
Inside man
The curious thing is Jongmans knows everything about the other customers of AACB. Except for All Options, every Dutch trading outfit is a customer of ABN. Jongmans knows in detail what Optiver and IMC are doing in the ETF space. This raises some eyebrows. Jan Bart de Boer, the current vice-chairman of AACB, will replace Jongmans on ad interim basis. Wouldn’t surprise me if this ad interim changes into regular job as CEO for Jan Bart de Boer.
Dijkstra worth more than Rietberg
At Flow Traders the co-CEO Dennis Dijkstra will lose some of his work to Jongmans. Dennis Dijkstra and Sjoerd Rietberg are both CEO, but Dijkstra received more shares than Rietberg at the IPO. The difference is substantial. Dijkstra received around 250k shares more than Rietberg, or €7,5 million in valuation. Reasonable to expect Jongmans to take over the helm at Flow Traders in a few years time.
Euronext to introduce options on PSI-20
In the land of Euronext, there are two main equity indices to trade. The CAC-40 in Paris. The AEX in Amsterdam, not the most leading index but it comes with a liquid pack of weekly and daily options. Hardly anybody knows there’s an index in Belgium with options too. Not the most spectacular trading in these options. The current open interest is 43.
There is good news for the BEL-20. Euronext is about to launch options on the Portuguese PSI index. Promises to be even more of a ghost town than the BEL. The options will trade in Amsterdam, but the futures trade in Lisbon. Que pena! Assume no market maker will take on all the paperwork for a Portuguese membership. The plan is to introduce the PSI options on June 27th.
New IPO’s, new options
Next week other options will arrive in Amsterdam as well. Following a string of IPO’s, a set of spotlight options will start. All of them will start trading on June 21, two days before the Brexit vote.
- Philips Lighting (already available at TOM, code PLT)
- Intertrust (code ITR)
- Coca-Cola European Partners (code CCE)
- ASR Nederland (code ASR)
Euronext notice on the new spotlight options (pdf). And on the PSI (pdf).
CTC earned $300m in Q4
Rumor has it CTC, Chicago Trading Company, had a record last quarter of 2015. The firm is mainly active in the option trading business. CTC is big in the index options, where it employs around 40 people. With offices in Chicago (duh), New York and London the company has a total headcount of around 350.
The education and training program at CTC is interesting. A chap named Sheldon Natenberg is head educator and partner at the firm. For those interested, they share a recommended reading list on their website (pdf).
They have a great dealing room (see featured image on top). The rumored gross pnl of $300m is their highest ever in any quarter. Volatility in the oil price was the main driver behind the record profit.
“The curious thing is Jongmans knows everything about the other customers of AACB.”
Same story at the time with Jaap Harteveld: from KBC to VDM.
if they knew how to trade, then they wouldn’t have had a career at a clearing firm
Willem Voormolen will be the new CEO of AACB.
Heard it somewhere.
@ 9:10 He is not being hired for a trader position, but for a CFO position… You don’t need to be good at trading to be a CFO
So what you’re saying is that AACB clear more trades in a single day than DeGiro does in an entire year and both of them service firms such as HiQ Invest. How can I rhyme this with DeGiro claiming to be the biggest player???
I cannot seriously entertain a reading list of books that are totally devoid of pictures of good looking women.
http://www.chicagotrading.com/pdf/CTC_ReadingList.pdf
@11:36, that’s different business, deGiro is client of AACB. All business of deGiro is cleared by AACB.
No it’s not. AACB acts as broker for many of its clients. Including DeGiro, HiQ Invest and dozens of prop shops, as well as the clearer for all of its clients. Even the big firms like Optiver trade certain markets exclusively via brokers such as AACB.
This is a total nightmare for the likes of Optiver, Tower, IMC etc. Marcel knows every Credit line, % mark up on credit line, fees levels, Rebates – Global and regional (Optiver will love that!), yearly results and key financial numbers – so effectively Flow have brought a window into their competitors and their cost base.
Large clients normally sweat that their pricing details will go out to their competitors and thus are always concerned when key people leave the likes of ABN. For Marcel to leave is their worst nightmare as he has an overview on all ABN Clients – so next time Flow’s fees are up for yearly review, guess who will be representing Flow!
Sad though for the staff of ABN, as Marcel was pretty highly regarded – tough but fair would be a fair description. Where this now leaves ABN Clearing is an extremely concerning, as they are so key to the market. Currently a lot of other clearer’s have zero interest in a large number of ABN’s clients and even for people like IMC, Optiver – if they ever left ABN to go to Merrill’s/SG, their cost base (Clearing and Financing Fees) would rise substantially.
C’mon now, even Flow themselves used to report their credit line facility in their published annual accounts. A quick look at the balance sheet of these companies will give you an idea of the order of magnitude for their credit line. Knowing that Optiver made a killing in region x trading products y & z doesn’t mean you can easily replicate their trading strategy. In fact, the clearing company will have next to no knowledge of the precise way certain algo’s work, how the client optimized their infrastructure etc. Besides, with around 800 people working at Optiver, don’t you think some of them ever say too much to their friends at rival firms over a couple of beers? And let’s not forget that Optiver have no right to consider this a nightmare scenario. After all, they poached their current CEO from AACB.
I think Jan Bart will be a great CEO for aacb and should keep this position!
On the point from 9.16pm:
When Paul left ABN, he was Head of Commercial for Asia Pac and at a time when Asia was not making much money nor did ABN clear for as many clients as it did now.
Marcel on the other hand did/would have a complete overview of the top 10-20 clients of ABN Clearing, including strategies, fees and credit lines. In today’s world a credit report for a client like an Optiver or IMC can run to 60-70 pages and will include details on trading strategies, history of mgmt, fin results, risk platforms and potential new markets.
Since circa 2013, ABN has effectively deep dived into the large M.Marketers, requiring them to effectively detail strategy, trading platforms, risk settings – effectively if you want to have a Billion EUR credit line, banks these days want to know everything about you. Again Marcel would have that type of knowledge sitting in his head and which is now available to Flow.
When you are talking about credit which are in the 100’s of millions of EUR, then small differences in BP charges – can be very meaningful.
Yes, a lot of the traders do chat – but things like comm’s and clearing fees are typically segregated from trading staff or alternately they only know the charges that they face for the products that they are trading and few people within an organization would then know about the Global rebates (Global Mgmt/CFO) that all of these companies receive basis total spend.
Again a great pick-up for Flow…
If things were as easy as that, don’t you think ABN could and would replicate such strategies themselves? Good luck copying VIRT without for example their superior infrastructure. And good luck squeezing a million lines of code and various pricing models into 60 pages of a credit report. Improving your clearing rates is always helpful, but if you weren’t making money before, chances are you still won’t after AACB give you better rates because the clearing costs are usually dwarfed by the exchanges fees.
So Jongmans was managing a company of 800 people, directing multiple management layers on 3 continents, securing credit lines with ABN AMRO Bank, directing multiple programs, directing a future strategy for AACB, talking to regulators, assessing the impact of new regulations and their capital requirements, replacing the CEO of commercial banking on sick leave , but really has had time to look in details like fee structures and is able to assess trading strategies even if only based on a netted position.
The guy did well and deserves a nice break
I hold Marcel in high regard and thinks he is an excellent hire, but I am yet to meet the first person from ABN (or any clearer really) who really know/understand the intricate details of the trading strategy of their clients. They receive a high level description but not the actual models, code etc.
He will know the details of the fee schedules of the main competitors and the first thing he will tell FLOW is that they are ABN’s biggest client in terms of trading revenue (and not Optiver).
The
but really has had timewas meant as sarcasm…. Ofcourse he has had no time to look into things like fees or trading strategies of clients, his job was to manage the major operational risks, align with ABN AMRO and the future strategy of AACBSo they are hiring a career bureaucrat from a failed company. ABN lifers are never a good hire. Now I he was from Goldman, that would be a story.
Like for example Hilgers, who used to work for AAC APAC and now is the CEO of the most succesfull trading company. (Despite having worked for AAC ;-))
Hilgers was not an AAC lifer.
Hilgers was a VDM-lifer.
The CTC cash was not made by their market making desks.
Define lifer?
Last time I looked Jongman was a lot and I mean a lot older than Hilgers.
If the current volatility stays the Zug IMC office might not close at the end of the year. Let’s hope in Brexit!
If the ctc cash was not made by their market making desk where would I have been made?
Their oil group is not that large–I highly doubt more than small came from oil unless it’s some separate strategy
“Foutje in model kost clearingtak ABN Amro ruim €15 mln” (FD30-6)