Optiver

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Optiver
Optiver.jpg
Founded 1986
Headquarters Headquarters in Amsterdam. Offices in Chicago and Sydney.
Key People CEO Paul Hilgers; Johann Kaemingk, founder
Employees 950+
Twitter @OptiverEurope
Website http://www.optiver.com/

Optiver was founded in 1986 as a market maker in equity options on the European Options Exchange (EOE) (now Euronext) in Amsterdam. The business includes Optiver Europe, Optiver Americas and Optiver Asia Pacific and makes markets in all major exchanges in Europe, the US and in the Asia Pacific.

Optiver has more than 950 employees globally, about 280 of which are traders. The firm's name is derived from two Dutch words: "optie," which means option, and "verhandelaar," which means trader.[1] Optiver Europe is an active member of the FIA European Principal Traders Association and the Association of Proprietary Traders.[2] Optiver US LLC is a member of the Futures Industry Association's Principal Traders Group.[3]

The net profit attributable to equity holders in 2015 amounted to €394.8 million, as compared with €246.9 million in 2014. And the operating profit in 2015 was €501.8 million versus €330.4 million in 2014. At the end of 2015, Optiver's total assets represented €6.9 billion, a decrease of 10.6 percent from 2014. [4]

Products Traded

Products traded by the firm include: equity options and underlying shares in leading companies, equity-index derivatives, baskets of shares, government bonds, cash and derivatives, commodities, foreign exchange markets, convertible securities, customized products or market request for over-the-counter (OTC) options, sector-index derivatives, derivatives on pan-European indices; and exchange-traded funds (ETFs).[5]

The firm is a highly automated operation with a strong emphasis on high frequency trading technology. It also participates in various wholesale trading markets, off screen, on equity, index and fixed income derivatives.[6]

Markets Traded

Optiver trades securities and derivatives on more than 50 major US, European and Asian exchanges.[7]

Optiver opened an office in Shanghai early in 2013, in order to target potential growth from the Chinese market amid concerns about a potential clampdown of high-frequency trading in the European market. The Optiver group had been operating in Asia solely via its Australia branch for 15 years. [8] Optiver said that in 2012, more than half of its income was generated outside the European Union.

The company's net trading income fell 24 per cent to €370m in 2013 as flat interest rates and economic uncertainty curbed investor appetite for trading.

On September 2, 2014, an Optiver representative confirmed reports that Optiver would cease its market-making on the Australian Securities Exchange (ASX). Optiver had been a big contributor to ASX’s Exchange Traded Options (ETO) products.[9]

Investments and Joint Ventures

In January 2008, Optiver took a minority stake in the pan-European trading platform Chi-X, together with 13 large banks and trading firms.

In 2008, Optiver and BinckBank launched a new industry initiative called TOM – The Order Machine. TOM encompasses a cost efficient, transparent multilateral trading facility (TOM MTF) and a ‘smart order router’, tracking the best execution prices on several exchanges and marketplaces (TOM Smart Execution). At the moment BinckBank, ABN Amro Clearing Bank, IMC and Optiver are shareholders in TOM. [10]

Regulatory Action

In July 2008, the firm came under regulatory action from the Commodity Futures Trading Commission (CFTC), which charged that Optiver tried to "bully the market" by purchasing large volumes of futures contracts to influence prices on three New York Mercantile Exchange energy markets. The CFTC said the alleged scheme resulted in a $1 million profit for the firm.[11][12]

The CFTC alleged that the traders, Randal Meijer, Bastiaan van Kempen and Christopher Dowson, tried on 19 separate instances in 2007 to manipulate energy futures markets, specifically the NYMEX Light Sweet Crude Oil, New York Harbor heating oil and New York Harbor gasoline markets. At least five of those attempts were successful, "causing artificial prices," the CFTC said.[13][14]

The scheme described by the CFTC in its complaint is commonly known as “banging” or “marking” the close. “Banging the close” refers to the practice of acquiring a substantial position leading up to the closing period, followed by offsetting the position before the end of the close to manipulate prices.[15]

In April 2012, a US Federal Court ordered Optiver, Meijer, van Kempen and Dowson to pay $14 million in civil monetary penalties and disgorgement. It also found that Optiver and van Kempen made false statements during an inquiry by NYMEX. The judge in the case also prohibited Dowson from trading commodities for eight years, Meijer for four years and van Kempen for two years.[16]

In June 2015 Optiver paid $17 million to settle the lawsuit. The accord meant that all the litigation around the long-running case for Optiver had ended. [17]

Key People

References

  1. Trader Profile: Optiver. Markets Media.
  2. About. Optiver Corporate.
  3. Membership. Futures Industry Association.
  4. Optiver 2015 Annual Review. Optiver.
  5. Core Business. Optiver.
  6. Screen Trading & Wholesale Trading. Optiver.
  7. Trader Profile: Optiver. Markets Media.
  8. Optiver eyes HFT prospects in China. Financial Times.
  9. Optiver to Halt Trading in Australian Options Markets. Forex Magnates.
  10. Investments and JV's-TOM. Optiver.
  11. Traders accused of manipulating oil prices. Globeinvestor.com.
  12. FINANCE: U.S. Accuses Trading Firm of Manipulating Oil Market. IPSNews.
  13. Optiver Holding Allegedly Manipulated Energy Market (Update2). Bloomberg.com.
  14. U.S. Claims Optiver Influenced Oil Prices. Chicago Tribune.
  15. CFTC Charges Optiver Holding BV, Two Subsidiaries, and High-Ranking Employees with Manipulation of NYMEX Crude Oil, Heating Oil, and Gasoline Futures Contracts. CFTC.
  16. Federal Court Orders $14 Million in Fines and Disgorgement Stemming from CFTC Charges against Optiver and Others for Manipulation of NYMEX Crude Oil, Heating Oil, and Gasoline Futures Contracts and Making False Statements. CFTC.
  17. Optiver pays $17m to settle oil manipulation suit. The Financial Times.
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