"Market making is dead"

Discussion in 'Professional Trading' started by zerochaos777, Oct 11, 2010.

  1. Here is the quote from the internal memo of ALL OPTION, one of the biggest market maker of the dutch financial market
    Strategic announcement distributed to all AO employees ¨C 21/09 9.05am

    Announcement ¨C New strategic focus for All Options

    Dear Colleagues

    We are in the midst of a market that has changed significantly. As many of you know, market making, our core business model, is dependent upon volume, and volume has died out in many of our markets. Today we see an environment where technology is critical, where the volumes in the underlying stock markets are declining, where investors seek safe and secure investments, where trading is being centralized into larger blocks of trade and dark pools, or going off-exchange completely. In addition, no one can predict when the markets will recover, if at all. This is not the market conditions the company was designed for in its current form. We as a company must change, we need to have a strong focus on what we are good at. Market making as we experienced it is dying out and we need to evolve. We are a trading company ¨C and we need to focus on how we can get that profitable trading business back.

    What we intend to do is move away from primary market making obligations that lose us money, to focusing on sophisticated proprietary trading strategies in markets where we can gain real value, stopping loss making markets, reducing our traded-products portfolio, simplifying our infrastructure, and investing in dedicated technology.

    With deep sadness I need to tell you that one of the unfortunate ramifications for this new strategy is that today we have to tell you that we will be closing our office in Hong Kong. The target date for closure of the HK office will be 1st January, 2011. I thank the team there for all of their efforts and hard work. We will however remain present in one of the Asian markets with our development of technology for Korea.

    We also preparing to implement the new strategy in our Willemstad and Zug offices, with the international Managing Directors being informed this morning. In addition, I will personally be informing all of the Amsterdam employees more about the changes in a town-hall meeting at 13:00 today, in the Mercury Hall / Mercurius zaal at BP5. Please can everyone attend.

    We need to embrace change and truly make the very best of it, we cannot dwell in the past and need to create a new winning team spirit and focus. Only then we can survive in today¡¯s environment.

    With best regards

    Allard W. Jakobs
    On behalf of the Board of Dire
  2. Lovely community, Zug.

    The ride from Zurich to Zug is so pleasant.

    Lots of switchbacks.....
  3. Occam


    Interesting. Note also the apparent crash in profitability for the (apparently) similar firm Optiver, in addition to the not-too-dissimilar Timber Hill, as well as that of a Goldman group that deals in equity options. It seems to be a combination of internalization/off exchange trading, low volume, and increased competition.

    Dare I speculate (and speculation in such matters is always perilous), that this is perhaps not a very good career choice for the budding rocket scientist anymore.
  4. Electronic market making is going the way of pit trading.
  5. You can thank the fucking retards at the FED for this nonsense. Nice job destroying our economy and capital markets
  6. Old news. Money is made off slop.

    hftscum take .0000001 cent profit per trade removing all slop.
  7. TraDaToR



    Trading all MSFT volume would make them 5$/day.
  8. "In addition, no one can predict when the markets will recover, if at all."

    thats pretty pessimistic.
  9. bidask


    Does he really believe that letting his employees trade prop will make his firm die slower?
  10. This proves ALL daytraders lose.
    If not even market makers can profit, much less daytraders.
    #10     Oct 12, 2010