IB Quits options game!

JSOP said:
WHY can't they just have ONE or a few central exchanges like the stocks or futures? It's very confusing and highly inefficient with all those exchanges each having their own rules and order-taking mechanisms that really does not benefit anyone.
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You realize how incongruous it is for a trader to be begging for a monopoly? Capitalism is the most inefficient form of economy....except all the others that have been tried!
Ironically you can find as many or more threads complaining about the monopoly ICE has and uses to charge high data fees and limit product offerings, right here on ET. Overall exchanges tend toward a monopoly or a few players with tacit collusion, it's the nature of the increasing returns from liquidity, so we can expect consolidation over time. Not sure there's a good reason to rush that though, you might not like getting what you ask for.
 
JackRab said:
Here you go, from their Q4 earnings:

"Market Making
Market Making segment income before income taxes decreased 66% to $44 million in 2016, compared to
2015, due to lower trading volumes and decreases in volatility and in the actual-to-implied volatility ratio.
Pretax profit margin decreased to 23% in 2016 from 44% in 2015."

44 mln is only 5% of their total earnings. Not sure whether that's included costs for shared builldings etc etc.... but it's peanuts compared to other market makers/HFT...
They're just not competing...
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Income and profit are two very different things. It takes a lot of income to earn a dollar in profit in the retail brokerage space, where as a small team of software devs and a couple traders can run an almost infinitely scalable MM operation. One of my pet peeves how often people get distracted by the big shiny income number when they think they're looking at profit.
 
one person, one person in this whole thread gets it. That is about the only impact this will have. Zero market impact, zero impact on options liquidity. The reason they get out is because they can't compete with the top shops on the technology level anymore. Simple as that.

Cdntrader said:
IB is about retail, not market making anymore. This will be net positive for their retail brand.
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Zzzz1 said:
one person, one person in this whole thread gets it. That is about the only impact this will have. Zero market impact, zero impact on options liquidity. The reason they get out is because they can't compete with the top shops on the technology level anymore. Simple as that.
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So I am possibly well behind on the news front, so forgive me for being ignorant. However, if memory serves, there was a time when Timber Hill was bigger than Citadel and was #1 in terms of mkt share. So at some point in the past they used to be able to compete with, and even do better than, the top shops on the technology level, right? Of course, that was a few years ago, so have they lost a lot of ground since then?
 
Sorry, I did not mean to have come across like that...you are right, but then Citadel attracted the interest of a large investment bank to team up in terms of algorithmic solutions cooperation. I forgot which bank it was, Credit Suisse possibly? Their dark pool (Citadel Connect) is also attracting vastly more client interest than TH's. But that is only in the tier 2 or 3 algo/dma department. TH has never even scratched the surface of the tier 1 names such as Virtu. I have never read of TH being part of any uhf data transmission project so I am pretty certain they never played in that league. It is actually hard to believe for me that they survived this long (TH) given how their technology stack is vastly inferior to some of the top players.

Martinghoul said:
So I am possibly well behind on the news front, so forgive me for being ignorant. However, if memory serves, there was a time when Timber Hill was bigger than Citadel and was #1 in terms of mkt share. So at some point in the past they used to be able to compete with, and even do better than, the top shops on the technology level, right? Of course, that was a few years ago, so have they lost a lot of ground since then?
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Zzzz1 said:
Sorry, I did not mean to have come across like that...you are right, but then Citadel attracted the interest of a large investment bank to team up in terms of algorithmic solutions cooperation. I forgot which bank it was, Credit Suisse possibly? Their dark pool (Citadel Connect) is also attracting vastly more client interest than TH's. But that is only in the tier 2 or 3 algo/dma department. TH has never even scratched the surface of the tier 1 names such as Virtu. I have never read of TH being part of any uhf data transmission project so I am pretty certain they never played in that league. It is actually hard to believe for me that they survived this long (TH) given how their technology stack is vastly inferior to some of the top players.
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Right, so since I last looked, they must have really really dropped the ball (willingly or not is immaterial). Makes sense, thanks...
 
apparently, what really interests me is what they plan with their prime/institutional brokerage desk. Are they looking to expand, add services...

Martinghoul said:
Right, so since I last looked, they must have really really dropped the ball (willingly or not is immaterial). Makes sense, thanks...
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