As everyone in de business knows, All Options lost their shirt in 2010. Majority of staff axed,  and the firm retreated to their small office on the Herengracht. Full scale cost cutting. The numbers are in for the personal holdings of the man who flew to close to the sun. Allard Jakobs lost EUR 67,8 million in 2010.

300k per day

His other investments fared better, so All Options lost even more. Say 70 million. That’s a very impressive EUR 300.000 per day (and the weekends are for free). The company was loaded with overhead. Too many oversized offices and too many cash burning folks occupying the desks. But you don’t lose 70 million on overhead. Derivative positions must have been a costly affair.

Tax

But there’s more. A provision has been taken for a tax claim worth € 38,5 million. And this may not be enough. Details are unknown, but the firm has an office in Curaçao. You don’t start a trading desk in the Caribbean for the weather, the proximity hosting or the well educated locals.  A less exotic possibility is a messing around with dividends and short stocks in Germany.

The underdog again

I always fancy the underdog. And hey, All Option is one of the underdogs again. The only way is up. While the tagline “a leading European derivatives trading house” is misleading, Allard Jakobs remains the comeback kid of the market. So don’t be surprised if he hits the jackpot again sooner or later.

• source : Quote (Dutch)

Last round of play offs for the primary market maker licenses ended last week.  In nearly a dozen option classes the traders have been trying to quote as tight as possible for two months. The best liquidity provider wins. It wasn’t IMC so send the tightest quotes. IMC lost play offs. All of ‘m.

The battlefield. The winning team in bold.

Caerus takes over three licenses from IMC. Six other licenses flow from IMC to 323, Nino and Scrocca (two licenses each). Not sure yet who has won the minor roles in TNT and Post NL.

Not a photo finish

IMC lost all play offs. That’s not the end of the world. Trading the options on Euronext can still be done without too much loss of quoting power with the Competitive Market Maker role. In addition, trading options on rival exchange TOM could be much more interesting than old and expensive Euronext.

There is something strange about IMC. Obviously the traders from Defares and Pot didn’t take the play off seriously. The other market makers have beaten IMC by wide margin. IMC didn’t even try to win.

This puzzles me. Perhaps IMC doesn’t believe in the added value of PMM licenses. Possible. But in this case, they shouldn’t have signed for the licences. Besides, they are still primary market maker in stocks options such as Ahold, Royal Dutch and ASML. They lost at least nine roles this time, and they will never get them back.

The financial transaction tax is a fine way to hurt the economy as a whole and eliminate trading. Volumes will be erased. Never thought it to be likely to come into effect in reality, but I underestimated French stupidity.

Here‘s the official plan. Four pages in French about taxes, not my cup of tea. In short, there’s good news and bad news. The bad news is the trading in large cap French stocks will be hurt severely and the derivative market will cease to exist.

The good news is the measures won’t work. Practical issues are deeply rooted in the plan and hard to overcome. In the extent the plans will work (partly), France will show the rest of the world how to shoot in your own foot. Even socialists in the rest of Europe will be scared enough to get second thoughts.

The masterplan

• Only French stocks with a market cap in excess of 1 billion euro will be affected.
• Any buyer of these French stocks will have to pay 0,1 % tax. This also counts for derivatives such as options (notional), hence the option market will be gone.
• Credit Default Swaps will be taxed 0,01%.
• High frequency trades will be taxed 0,01%

It doesn’t matter where the trade is done. A Russian buyer of shares Total or Sanofi on Wall Street will be taxed. Vladimir has to pay money to Sarkozy. The administration will be done by keeping track of the Central Securities Depository (CSD). This CSD receives the nett change from other central clearing parties, so buying and selling shares on the same day wouldn’t be taxed with the current proposition.

Suppose, for sake of the argument, the French fix all practical problems and their markets will be gone. Very well possible one of the biggest option classes in Amsterdam would be hit as well. After all, Mittal is part of the CAC40. Maybe a suggestion to liquidate your positions while you still can. To be continued.

As brought the news here in december 2011, Euronext will start a cafe on Beursplein 5. It has now been confirmed the bar will be run by Brasserie Harkema. However, there’s no permit yet to open doors to the public to sell the beers. Without it the bar would only be open for Euronext staff and traders and brokers working in the building.

You don’t need Harkema for that. Guess the permit won’t be such a big deal then. Anyway, I like the idea of having your beers with a stock ticker above the bar.  Good for the oldskool atmosphere. This stock ticker is confirmed, as well as the name of the bar : Café 5. Too bad the website is already taken by another Cafe 5.

Opening per March 1st.

The Belgian mother KBC Bank decided to call it quits after 16 years. A sad thing for the staff at KBC and for the market as a whole.

Used to be two clearing banks for market makers in Amsterdam. Alas, no more. ABN AMRO (Fortis) is the only remaining clearing bank in town.

See, there is this stamp duty tax in France. Used to be capped at EUR 5000, and only applicable for transactions with the existence of a “written deed” (“acte“). Nothing will change for regular executed trades on an exchange. But as of January 1st 2012 the law has changed. The scope of the law has been widened, and the cap is removed.

OTC trades in French stocks or options could be affected by this law. Nobody knows. Everybody is puzzled and this creates panic among the French brokers. Some brokers halted OTC trading altogether until clarifications from the French Tax Authorities arrive. Understandable, with the Sarkozy government viewing the financial world as the root of all evil.

• PWC Landwell newsflash (pdf)

Would be kind of a nuclear option ; all derivative trading would vanish. Sure, large firms such as Optiver and IMC would survive elsewhere – but trading in Europe would be wiped off the map. Therefore, good to read the “Loch Ness Monster” will disappear again. Merkel was only sharing her personal opinion monday. She should start a website for personal opinions. Zugtrader.ch is still free.

The year 2012 starts with January 1st being a sunday, but the market will close exactly twice as often as previous year. With closed markets I mean scheduled public holidays, not the frequent market shut down caused by system trouble at Euronext.

• Friday 6 April 2012 (Good Friday)
• Monday 9 april 2012 (Easter Monday)
• Tuesday 1 May 2012 (Labour day)
• Tuesday 25 December 2012 (Christmas)
• Wednesday 26 December 2012 (Boxing Day)

Euronext raised fees for small market makers. After three weeks in business, the decision is cancelled again.

The preferential class fee scheme for market makers has been removed from the price list as of December 1st, and the fees for market makers without liquidity provider roles doubled. Apart from not understanding the economic need to bully the small ones, raising fees at the start of a price competition with TOM is an interesting tactical move, a clear example of out-of-the-box thinking. At least I don’t get it.

Also at Euronext, the management can’t remember the rationale for doubling the fees for small market makers. Starting January 1st, the preferential class is back on the table again and the small traders can resume trading like nothing happend, against the old fee schedule. The notice states the fees will be raised again as of July 1st 2012. That’s not going to happen.

The official notice can be found here. Also fixed are some fee trouble with daily and weekly options.

There is only one bright spot. The traditional exchange building on Beursplein 5 is a marketing dream. The Occupy moment underlines the value of a recognizable symbol in an electronic trading world with a lack of a physical market place.

The Christmass tree has been moved to the Dam square, but next year the building at the Beursplein will capture the attention again. It has been confirmed the exchange building will open a cafe for outside visitors. The heavily guarded building hosts an internal bar, and it will open doors to outsiders.

Instead of training excess staff to serve beer and lunch, the management of the bar will be in the hands of an external firm (rumour: Harkema). An even bigger contrast to the Occupy movement, the exchange will try to obtain a permit to use the square for an outdoor cafe. The latter will probably take some time, but planned kick off for selling lunch to the public is in Q1 2012.