Becoming a market maker

A

Adar

Hi,

an interesting career direction I find is market making. I think this will be an interesting thread for other starters. Below I have structured some questions to outline the main points for those who want to pursue this career direction.

1) Let's take CME Group, do they have their own market makers or there are only the ones working for the market making firms like KCG? I sent them an email but no answer so far. I will post it here when I get a response.

2) JP Morgan, Nomura, BoA ML, Citi, Credit Suisse, Deutsche Bank. As far as I know all those are the market makers in the equity and bond markets (GILT DDM are an example). However do you know which of those are market making in exchange futures and options derivatives and OTC commodity markets (I mean not only oil but also grains)?

3) Speaking about the market making companies like KCG, IMC and Optiver. My impression is that some require only guys with degree in physics or aerospace engeneering, others find useful to get quick thinkers with good pc (coding) skills, while having IT brains as a support. Is it correct? Which market making companies in exchange and OTC derivatives you know?

4) Does anyone of you had an experience working at any of these companies/as a market-maker?
4.1) How does the market making world look like at the office. I read about market-maker, floor trader and runner (as far as I know with eletronic platform development runner and a floor trader is a red book specie). Who else is there?
4.2.) If you had experience working for market-makers/as a market-maker do you find it important to have an experience as a dealer in a brokerage firm/bank prior to it?
4.3.) If you had experience working for market-makers/as a market-maker do you find it important to have an experience working in clearing and custodianship? My concern is that while this knowledge is great, it doesn't much help in market making and thus is not worth of taking a position there.
4.4.) What kind of experience is important?

I think this list of questions is enough for a start.
Looking forward to your reply.
 
I would like to know those as well.
Also, what is the inherent risk involved in market making. Isn't it simply like any other trading strategy? if so why, or why not.
 
The business was undergoing consolidation. So, it's not the best area to pursue. HFT is also undergoing consolidation.

The Next Big thing is the billion dollar question.

But if that's what floats your boat, good luck.
 
http://arlingtonhall.com/i-joined-the-wrong-mob

".... Around the time of his deportation to Italy, mobster Lucky Luciano granted an interview in which he described a visit to the floor of the New York Stock Exchange. After he visited the floor of the NYSE someone explained to him the role of the floor specialist, he commented, “A terrible thing happened. I realized I’d joined the wrong mob.” ....."
 
nemesis45 said:
I would like to know those as well.
Also, what is the inherent risk involved in market making. Isn't it simply like any other trading strategy? if so why, or why not.
More...


its just like hft if done right. you steal as much as you can without being caught.
 
I have never programmed an hft either, so wouldnt know the exact strategy.

But in the end for market making you'll have to put a bid and offer to make money.
Lets say using some x model.

So it's just like any other strategy? why is the risk less than other strategies.

Does it involve taking orders from clients. In which case risk is an altogether different story.
 
you need to find a good market to make markets in. enough volume and liquidity, wide enough spread, access to orderflow, barriers to entry, clubby. So if I make markets in WTF options I want to be one of a few market makers, want the underlying to be very liquid, want it to be a call around market where I am the first call, and non-transparent pricing :D
 
Adar said:
Hi,

an interesting career direction I find is market making. I think this will be an interesting thread for other starters. Below I have structured some questions to outline the main points for those who want to pursue this career direction.

1) Let's take CME Group, do they have their own market makers or there are only the ones working for the market making firms like KCG? I sent them an email but no answer so far. I will post it here when I get a response.

2) JP Morgan, Nomura, BoA ML, Citi, Credit Suisse, Deutsche Bank. As far as I know all those are the market makers in the equity and bond markets (GILT DDM are an example). However do you know which of those are market making in exchange futures and options derivatives and OTC commodity markets (I mean not only oil but also grains)?

3) Speaking about the market making companies like KCG, IMC and Optiver. My impression is that some require only guys with degree in physics or aerospace engeneering, others find useful to get quick thinkers with good pc (coding) skills, while having IT brains as a support. Is it correct? Which market making companies in exchange and OTC derivatives you know?

4) Does anyone of you had an experience working at any of these companies/as a market-maker?
4.1) How does the market making world look like at the office. I read about market-maker, floor trader and runner (as far as I know with eletronic platform development runner and a floor trader is a red book specie). Who else is there?
4.2.) If you had experience working for market-makers/as a market-maker do you find it important to have an experience as a dealer in a brokerage firm/bank prior to it?
4.3.) If you had experience working for market-makers/as a market-maker do you find it important to have an experience working in clearing and custodianship? My concern is that while this knowledge is great, it doesn't much help in market making and thus is not worth of taking a position there.
4.4.) What kind of experience is important?

I think this list of questions is enough for a start.
Looking forward to your reply.
More...

1. The exchanges: NYSE, CME, ISE, ICE are venues (like a trade fair). The participants work for themselves or for firms. More and more, it's firms that dominate market making with centralized "brains" managing the risk accumulated from the different trading venues.
2. The firms you listed pretty much make markets in everything from futures, equities, bonds, and OTC illiquid derivatives.
3. A market making operation is like a football team. There's a quarterback and lot of supporting staff (traders, quants, tech). They don't strictly look for physics people, but the business overall is getting more technical. However, each role is different. Floor traders need to be physically more aggressive and quick on their feet. IT guys good at programming. Quants good at mathematical modeling.
4. Market makers are firms with lots of roles to fill. Because they are machines, firms will hire you and train you for the role they want you to play. You don't need to have prior experience or knowledge. But you need to have the personality, intelligence, and work ethic to be competitive in the field.
 
You must log in or register to reply here.
Back
Top