AMEX closing ???

Discussion in 'Options' started by qazmax, Jan 13, 2004.

  1. qazmax


    I have heard a couple of rumors going around...

    One, the AMEX could not merge with PHLX and now they are considering closing up shop on the options floor.

    Second, that NITE pulled out all AMEX option operations?

    Anyone verify or deny these rumors?

  2. not only NITE but a whole host of other small and middle market floor trading firms...

    no business...
    too expensive to maintain a presence there....

    not surprising though....

    ok, back to my commercial. I'm getting a lot of action, you know...
  3. dgmodel

    dgmodel Guest

    slk, nite, and someone else recently pulled out... no longer doing business there... i was on the floor of the amex for a short while, and the biz there was slim to none, and i was in the DIA pit, with SIG, SLK, Wolverine, and a few other firms... dont get me wrong ppl were doing business but the mkt hasnt had much volume in general on the amex since 9/11 and trading for edge is becoming a tough feat to accomplish... if abn amro pulls out as well they very well could close up shop...
  4. If SLK has pulled out the end is surely near...IMO
  5. DEF posted some blurbs lately about IB/TMBR Hill leaving AMEX as well...

    where the hell is def these days, anyway???
  6. qazmax


    I believe TMBR closed up the AMEX market makers suddenly some time ago...

  7. Knight Amex exit highlights changes in US options
    Fri January 9, 2004 02:10 PM ET

    By Doris Frankel

    CHICAGO, Jan 9 (Reuters) - Another player is shuttering its options operations on the American Stock Exchange, raising the question of how many options exchanges the market can support in a business moving beyond an open-auction environment.

    Market maker Knight Trading Group Inc. (NITE.O: Quote, Profile, Research) on Friday became the fourth major participant in recent weeks to pull out or scale back its options business on the Amex, the third-largest U.S. equity and options exchange.

    Knight will stop making markets in 74 options classes, saying the closings will not have a significant impact on the financial results of its options business.

    Five U.S. options exchanges, which are currently battling for a slice of the equity options pie, will be looking at a changed world this year when a new electronic entrant, the Boston Options Exchange, is expected to enter the fray.

    "Most likely, a merger or two will occur in the next few years rather than any one of them shutting their doors," said Michael Schwartz, chief options strategist with Oppenheimer & Inc.

    The Amex has seen its share of the options trading market shrink in the face of stiff competition from the electronic trading platform of the International Securities Exchange.

    To become more competitive, the traditional options exchanges have embraced strategies that blend automated trading with floor-based dealing to keep and attract order flow.

    Amex said its technology improvements are on schedule. The exchange expects to roll out its options electronic trading platform, dubbed ANTE, this year, pending regulatory approval. That platform would provide electronic quoting for market makers and improve Amex's trade-matching capabilities.

    Since ISE burst onto the scene in May 2000, it has siphoned off business from the older markets and last year captured about 30 percent of the equity options pie. In contrast, Amex's market share dipped to 21.17 percent in 2003 from 25.85 percent in 2002.

    Knight's move highlights the uncertain future traders face as point-and-click technology increases speed, reduces costs and the need for face-to-face dealings, some analysts said.

    Large options specialists, which already steer orders electronically, find it costly to bear structural costs on multiple venues that essentially offer the same product. That product is equity options, contracts that give the right to buy or sell a security at a predetermined price within a set period of time.
    "Many firms are continuing to look at their business and cut costs where they can," said Michael Bickford, Amex senior vice president of options.

    As a result, some participants have scaled back their operations or pulled out of smaller exchanges and dropped less actively traded options listings.

    "Traders are under pressure to constantly improve markets, which further reduces their margins. So they have to make business decisions and cut costs in order to stay viable," said Scott Fullman, chief strategist with Investec U.S.

    Traders' profit margins have been cut by the increased competition from the listings of identical options on different markets, the high costs of floor trading and decimalization, which has narrowed the bid/ask spreads.

    The belt-tightening by industry players was apparent when Spear, Leeds & Kellogg, the specialist trading arm of Goldman Sachs Group Inc. (GS.N: Quote, Profile, Research) , last month sold off options on 12 exchange-traded funds and indexes to Performance Specialists.

    This comes after Dutch specialist market maker Van der Moolen Holding (VDMN.AS: Quote, Profile, Research) (VDM.N: Quote, Profile, Research) pulled out its equity options business on the Amex and the Philadelphia Stock Exchange. Previous 1| 2
  8. Spear, Leeds scales back Amex business
    Wed December 31, 2003 02:34 PM ET

    NEW YORK, Dec 31 (Reuters) - The specialist trading arm of Goldman Sachs Group Inc. (GS.N: Quote, Profile, Research) said it sold 12 listings on the American Stock Exchange, in a bid to streamline its business, but the move comes at a difficult time for the No. 3 U.S. stock and options exchange.

    Goldman Sachs said its Spear, Leeds & Kellogg unit sold the rights to act as intermediary for trading of options on 12 exchange-traded funds and indexes to Performance Specialists.

    "This is part of a continuing rationalization of our business on the exchanges," said Goldman spokesman Ed Canaday. Canaday would not disclose the price of the sale. News of the sale was first reported in the New York Post.

    "The options industry as a whole is going through consolidation and the Amex is taking steps to ensure that we remain competitive," an Amex spokeswoman said in an e-mail.

    She added that two of the exchange's specialist firms, AGS Specialists and Performance Capital, "have increased their commitment to the Amex and we're delighted by their strong show of support."

    Spear, Leeds's move comes as the Amex is facing a host of issues, including eroding market share.

    This month Dutch specialist market maker Van der Moolen Holding (VDMN.AS: Quote, Profile, Research) (VDM.N: Quote, Profile, Research) left the trading floor.

    In November, options trading firm Timber Hill LLC said it would close its specialist operations and cease floor trading at the Amex because it wanted to focus on exchanges "that have shown a greater proficiency of electronic expertise."

    In the past year, the Amex's market share in equity options -- contracts that give the buyer the right to buy or sell a stock at a preset price within a set time period -- has declined.

    The exchange slipped from its No. 2 spot in equity options volume to No. 3, due to the meteoric rise of electronic options trading on the International Securities Exchange formed in May 2000.

    Industry sources said Goldman's move highlights a desire to scale back on trading floor personnel as cheaper, more efficient electronic trading becomes dominant.

    The growth of electronic trade has created quick executions at cheaper costs," said Scott Fullman, chief options strategist at Investec U.S. Inc., a U.S. brokerage dealing in equities, options and fixed income.
    "I think Goldman wants to concentrate their operations to save costs. The number of specialists and traders has gotten smaller. There has a been a major consolidation."

    The New York-based ISE currently holds the No. 1 spot in equity options volume.

    Floor traders on the traditional exchanges face intense competition from the listing of identical options on different markets and the siphoning of market share by the all-electronic ISE.

    Decimalization of options prices in recent years has also narrowed the bid and ask spreads in options, further cutting into traders' profit margins.

    (Additional reporting by Jake Keaveny in New York and Doris Frankel in Chicago) Previous 1| 2
  9. Moolen shares hit as options closure multiplies woes
    Wed December 17, 2003 05:49 AM ET

    By Melanie Cheary and Karl Emerick Hanuska

    AMSTERDAM, Dec 17 (Reuters) - Shares in Dutch specialist market maker Van der Moolen (VDMN.AS: Quote, Profile, Research) fell 10 percent on Wednesday after the firm said it would shut a troubled U.S. options business and it was named in a lawsuit.

    Van der Moolen, which makes the bulk of its income in the United States and is the subject of a New York Stock Exchange probe into alleged improper trading, said it was reorganising its U.S. options business and would take an impairment charge.

    The firm, which was named late on Tuesday in a lawsuit filed by Calpers, the biggest U.S. public pension fund, said its 65.5 percent owned unit Cohen, Duffy, McGowan (CDM) would withdraw as an options specialist on the American Stock Exchange.

    The closure of CDM, which made a loss in the first nine months of the year, will result in an impairment charge of about 17 million euros ($21 million) at the pre-tax level that will be included in fourth-quarter results, Van der Moolen said.

    "Van der Moolen is being hit by a very bad news flow that seems to be continuing. At this point people are expecting to hear more bad news about the company than good," said a trader at Delta Lloyd in Amsterdam.

    By 0912 GMT Van der Moolen shares were 9.7 percent weaker at 6.46 euros after falling as low as 6.40 euros. The stock was among the biggest decliners on the Amsterdam bourse.


    Dealers said investors were becoming more and more worried about how the company, which reported a 68 percent slide in third-quarter earnings to 5.5 million euros, could continue making profit in the face of its difficulties.

    "The news just isn't good. You have a lawsuit, a 17 million euro writedown and lots of questions about how they are running their business," said one trader.

    "Something has gone wrong with the way they were operating in the U.S. and that is the reason for the lawsuit. Whether or not they did something wrong, you've got to wonder how this is going to affect their ability to turn a profit," he added.
    Van der Moolen -- based traditionally on the Amsterdam bourse and one of the top five market makers in New York -- has been hurt in recent years by weak financial markets.

    Market specialists such as Van der Moolen act as middlemen on the exchange floor and use their own funds to generate trading opportunities for stocks and bonds.

    The NYSE has accused a clutch of floor-trading firms of improper trading, which could have cost clients millions of dollars, and says it will seek fines of about $150 million.

    Van der Moolen has declined to comment on the probe by the NYSE, which started early this year.

    In a lawsuit filed on Tuesday against the NYSE and its specialist trading firms, Calpers claimed that what it called widespread fraud and lax oversight had cost investors millions of dollars. ($1=.8103 euro)
  10. jem


    This is part of the inevitable result of publically traded companies buying up the specialists posts. Instead of understanding that everyone makes less in a bear market. These and the other greedy bastards sought to make as much by screwing the customer harder. In the end the customer has won. The nyse will never be the same institution. Perhaps it was inevitable because of electronics. But if the specialists had not been so greedy and started to take the others side of trades so often screwing traders then this would not have happened.

    My theory. A market maker can screw someone 10 percent of the time but not 30 or more percent of the time.

    I mean I felt it in my trading. Instead of getting to interact with other orders at the price I wanted, I had these dirt bags pennying me on both sides of the trade.

    What is the saying pigs get fed hogs get slaughtered.
    #10     Jan 13, 2004