The Order Machine (TOM)

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The Order Machine (TOM)
TOM Logo.jpg
Founded 2009
Headquarters Amsterdam
Products Multilateral Trading Facility, brokerage
Website tommtf.eu

The Order Machine, aka TOM, is an alternative trading system founded in 2009 as a joint venture between BinckBank and Optiver. It is located in Amsterdam. It was created as a challenge to NYSE Euronext's business, in particular retail banks.[1]

By 2013, the exchange ownership had expanded to five firms:

  • Optiver
  • BinckBank
  • ABN AMRO - purchased 25 percent share in July 2010
  • IMC Group - purchased 9.99 percent share in March 2012
  • NASDAQ OMX - purchased 25 percent share in December 2012, with an option to buy an additional 25.1 percent share.[2]

The Order Machine reached its first million traded options contracts on October 11, 2012, 10 months after its launch. By April 2013, its market share in Dutch options was estimated at 20 percent.[3] On August 16, 2013, TOM said it had processed its 10 millionth contract.[4]

In August of 2013 the company's CEO, Willem Meijer, told Bloomberg that TOM would aim for more than 50 percent of market share in index options in 2014.

In January 2013, TOM began listing options based on NYSE Euronext’s benchmark AEX Index (AEX) for Dutch stocks. In April 2013, NYSE Euronext' LIFFE sued TOM, claiming the alternative trading system violated LIFFE's intellectual property rights by not obtaining a license to list options based on the AEX.[5] In July of 2013 a court ruled that TOM infringed NYSE Euronext's trading rights, and as a result TOM changed its ticker symbols for options based on the AEX.

In August of 2014 ABN Amro said it would direct all its equity options retail flow to TOM starting on September. The bank said it would route all retail trades through TOM's Smart Order Broker platform to execute trades on TOM or Euronext based on where the best price is to be found. TOM had been seeking such a deal with ABN Amro for a long time. ABN Amro Clearing Bank has been a shareholder in TOM since 2010.[6]

Willem Meijer stepped down as CEO of TOM on September 1, 2016. He was with the company since its creation in 2009. During those seven years, TOM gained 40 percent market share in the Netherlands.[7]

Products

TOM is composed of two entities:

TOM Smart Execution is a member of Eurex. [8] TOM is also a market maker on NYSE Liffe.

Key People

  • Henk Wim van Arem, chief operating officer

Contract Volume

Year Total Annual Volume Percent Change
2016 23,788,784 (-)8.6%
2015 26,015,228 n/a

References

  1. The Order Machine, New Alternative Trading System, Seeks Start. Bloomberg.
  2. TOM welcomes NASDAQ OMX as shareholder. The Order Machine.
  3. Liffe Sues Dutch Options Market TOM Over AEX Products. Bloomberg.
  4. The Order Machine Processes 10 Millionth Options Contract. Bloomberg.
  5. NYSE Euronext sues Tom. Financial Times.
  6. ABN to send retail equity options flow to TOM. FOW.
  7. Willem Meijer to step down as CEO of TOM. TOM.
  8. TOM Smart Execution becomes a member of Eurex. TOM Group.