Things are going fine with TOM. The market share is increasing and next year Meijer expects to overtake Euronext in market share in the Dutch options. That may be a little too optimistic.

The market share in Daily AEX options has reached 40%. With a million contracts traded every month, TOM isn’t profitable yet. Meijer indirectly points at shareholder ABN AMRO, which still doesn’t route their order flow to TOM.

The infrastructure of TOM will move to London this month, and will be using a more advanced NASDAQ platform. It’s only a small step to expand abroad, and in 2014 TOM will open operations outside of The Netherlands. He mentions France, Belgium, England or Germany. It’s easy to launch new products, but the flow isn’t coming from thin air. Suppose TOM will try to get a partnership with foreign brokers, such as Interactive Brokers for starters.

While TOM will meet Euronext in court pretty soon, Meijer believes both exchanges should work together in the clearing and settlement. Just like in the USA. Would reduce costs for both of them, and there is an opportunity trades opened on TOM can be closed on Euronext. Or other way around.

Of course TOM is confident it will win the case against Euronext in court. Few years ago, Commerzbank won a similar case against Deutsche Börse. First hearing is scheduled on 3 June 2013.

The country turned orange this week with our new king. Not much too add, but reading the Economist today on the Dutch Fleet in electronic trading. Briefly mentioned the history of the Dutch exchange and the three most prominent Dutch trading firms. Not the latest edition, but from April 20. Here’s the link.

For market shares in the electronic trading the Economist editors take a look at the Scandinavian markets. Idea is probably from my article in September 2011 or – more likely – from this one, published one week later (coincidence, sure).

Anyway, interesting general story and comments from Defares and Elzinga in the Economist. However, no new developments or news – just some entertainment.

The market in AEX index options on Euronext has always been a competitive battleground. Not in the same league as the Eurostoxx options, but still tight spreads and liquid markets. No wonder the exchange is defending it by raising legal barriers of entry for TOM.

In the meantime, there’s something wrong in the AEX for a few weeks now. Several market makers noticed a steep increase in losing trades on their quotes. One market maker suggests a new competitor in the pit with faster systems and lower latency is able to arbitrage less sophisticated traders. “In normal circumstances every liquidity provider was fast enough, now everyone is getting afraid to quote at all“.

Another trader points to Euronext. Given their track record with trading technology that doesn’t sound unlikely. Last week the all trading in the index was halted for few hours.

Both of them confirm the liquidity in the index options is declining, especially in the Daily options. “Even with the slightest move in the future, we’re getting arbitraged – doesn’t make sense for us to quote high delta strikes“. Reported problems are going on for three weeks now. Checked today, only five out of eight market makers keep their quotes in the market in the daily options.

A bigger fish in the market or an old-fashioned exchange? I would place my bets on the second guess.

There are a few possibilities. TOM could use some liquid AEX ETF as underlying instrument for their options. Another solution could be some reasonable fee to be paid to the old exchange. Apparently earlier negotiations on the matter between the exchanges didn’t work out, TOM expects better terms to be discussed in court. TOM knows what they’re doing. By the way, yesterday Nasdaq OMX finalized the purchase of the 25% stake in TOM (pdf).

Comments

Starting lawsuits are old reflexes from the former monopolist. Speaking of lawsuits, it’s has only been a month since I received some threats from law firms. IMC must have spent more on legal advice than this website’s total advertising revenue is per year (next time, I can guarantee the same result for half of the lawyer fee). As a result some posts and comments have been deleted, and open commenting is gone. A quick registration is required now – although you can remain as anonymous as you want.

Nieuwe Steen Investments Options (NSI)

Options on this troubled real estate company started this Tuesday. To everyone’s surprise, even three trading firms signed for primary market maker in this class. All Options, 323 Trading and Caerus will be the liquidity providers.

According to Bennington it will be the tenth edition. Very well possible it’s edition number eleven. Even better. As always, the sponsor of the tournament is Eurex.

The past winners:

• 2012 – EEX
• 2011 – IMC
• 2010 – 323 Trading
• 2009 – KBC Bank
• 2008 – Eurex
• 2007 – Euronext
• 2006 – Market Wizards
• 2005 – Fortis
• 2004 – IMC
• 2003 – Optiver

Options on Nieuwe Steen Investments

Euronext Liffe decided to introduce options on Nieuwe Steen Investments. A sinking ship in real estate, but a part of the midcap AMX Index. Can’t imagine much volume in these options, but All Options will probably be ready to quote it. Market maker roles will be selected next week, trading will start on April 23.

Better Options relocate to Beursplein 5

More real estate. New tenants for the former trading floor at Beursplein 5 one year ago. Alas, Mijnbroker folded in 2012 and Nyenburgh was bought by Virtu. Lot of office space for rent. There’s good news for Euronext, as arcade shop Better Options will move in – leaving their office on the Nieuwezijds Voorburgwal.

My friend and used-to-be colleague Robert Coehoorn (1981-2013) passed away. During the past week, I kept thinking about the movie Sliding Doors. A movie about how someone’s future completely changes as a result of a single decision.

On a Friday in the autumn of 2006 Robert came to interview at IMC. I spoke with an open, honest, friendly and intelligent guy and I wanted to make him a job offer. Robert said that he also had another offer from his previous employer and that he had to give it a thought. That evening, I realised that on his resume, I had seen Robert’s home address. It was close to mine. I went and put a copy of “Inventing Money” by Nicholas Dunbar in his door. Came next Monday, Robert called and said  that he had read the book over the weekend and that he chose for IMC.

Robert’s career skyrocketed. About half a year after Robert had started, in July 2007, I received a mail in Hong Kong that 25 year old Robert was “aan het knallen” (jargon for: ruling the world). Another six months later there was a status report saying: “In Robert Coehoorn, we’ve found a strong new teammember (…) Robert will have an additional trainee to help out“.

When I left IMC in 2008 Robert sent me a heartfelt mail in which he reminded me of the book that I had brought him and thanked me for everything he learned. I wrote to him that he had gotten himself on the fast track and that he should stay on it.

So he did. In 2009, Robert’s desk moved to Switzerland. Robert had turned Head of ETF Trading and Index Arbitrage and I was told he did a great job. From his Facebook entries you can see that Robert was fully into sports. In Switzerland he would snowboard, run and cycle. And abroad it was surfing and diving.

Last week, even on Robert’s fatal very last day in Switzerland before he’d move to Holland, he went snowboarding. He loved life. Sliding doors. What if Robert had chosen to stay with his old employer? He would or wouldn’t have moved to Switzerland. But either way he would have gone to the mountains often for the great outdoors.

And Robert’s many current and former colleagues who now express their sorrow, would not have had the privilige to work and laugh and cry with RoCo, as they always call him.

In our last chat, a month ago Robert, my former pupil, ended this chat with an advice to me: “nu wereld veroveren” (now conquer the world). I think he wanted to say this for everyone. Love life and conquer the world.

April 2013, Hong Kong, Tom Voute

Better safe than sorry. I’m not fighting for a nobel cause, maintaining this website is just for fun. So when expensive park avenue law firms are demanding posts and a few hundred comments to be taken offline : they got it.

Apart from visitor traffic going through the roof, there’s not much upside for me in getting involved in these kind of lawsuits. That’s more for Quote and Geenstijl.

In the meantime, the comment section is shut down until further notice. Will probably return with some kind of register option, after moving the servers to North Korea. Seriously, taking a break for a while.

Update. Tibra’s profits soared in Europe. Revenues increased 45% to 27 million. Headcount was down with 24 to an average staff of 57. Those remaining traders and developers shared 10.6 million in salary and bonus. That’s an average of 175k.

]]> http://www.amsterdamtrader.com/2013/03/post-deleted.html/feed 0 http://www.amsterdamtrader.com/2013/02/tibra-cfo-leaves-for-futures-brokerage.html http://www.amsterdamtrader.com/2013/02/tibra-cfo-leaves-for-futures-brokerage.html#comments Thu, 28 Feb 2013 21:30:38 +0000 Jack http://www.amsterdamtrader.com/?p=1676 Tibra was founded by traders leaving Optiver in Australia, while possibly taking some trading software source code with them. Both firms are spending millions on lawyer fees ever since. A few weeks ago the party moved to a California court – something to do with the disclosure of emails by Google. Read for yourself, it’s short but it’s only for enthusiasts (pdf).

Anyway, Tibra is witnessing their own employees resigning to found a new company (Maven). Can’t be a called a surprise. Latest news is the Tibra CFO Justin van Wijngaarden (LinkedIn) jumped ship. The former Lehman Brothers banker signed for GH Futures. A London based brokerage company founded by Gedon Hertshten.

People switch jobs for any reason, but this leads to speculation about falling profitability at Tibra. Especially while they’ve resigned their membership of the London Stock Exchange a few weeks ago.

Fast forward to 2013. The court decided what everybody has always known, it has been maladministration. Hans Kroon and Richard den Drijver ruined the firm, investigators concluded. Some members of the Supervisory Board, more specific Van den Broek and De Marez Oyens, also must have had a bad weekend.

The investigation wasn’t cheap - 435.962,05 euros. Judge decided Den Drijver and Hans Kroon will have to finance this. This is only a first hit, as the road is open for claims against them. Shareholder association VEB will be eager to take action.

You can read the full research report and court ruling over here (Dutch). For entertainment, I can highly recommend Steve Brown (Dutch). Former happy gangster must have used a lot of his “imagination”.

Hans Kroon won’t be covered by insurance

Richard den Drijver will be fairly safe. Every management board will have an insurance policy against liability and claims. It’s a field of debate what’s covered by the insurance, incompetence is covered but outright theft isn’t – and the insurance is usually limited to a few million.

I’m an amateur in insurance law. Correct me if I’m wrong. It appears Hans Kroon is in deep trouble as the court ruled he is responsible for crashing the company. However, the man was not a member of the board. That’s an unusual situation – meaning no insurance is going to save him. 

It’s a difficult market, and it wouldn’t be completely unthinkable when a market maker is forced to shut the doors altogether. On the other hand, MMX may feel themselves more comfortable trading outside the Eurozone.  They are listed as market maker for almost a hundred single stock options in London (xls). Usually only with the ever present Timber Hill as company. Sometimes alone, lonely quoting in option classes such as Fresnillo and Barratt Developments – to name but a few. Odd.