A first-of-its-kind outside investment from Silicon Valley venture heavyweights into Citadel Securities is a significant event, particularly for possible future competitors in crypto markets. But, the transaction itself didn't need to be exposed. So, why was it? Was this news or strategic communications? Alphacution weighs in...
In this 67-page, 64-exhibit chart book, “Simplex Trading, Unadjusted,” Alphacution borrows the spotlight from the record-setting volumes in the US options market for 2021 and focuses it in on one of the key – yet, relatively little known – players in the space: option market maker, Simplex Trading, LLC. Taking some of its recent modeling upgrades for an initial spin, Alphacution performs its unique brand of visual display on public regulatory data to present what is likely to be an unprecedented review of such a secretive player operating in such a complex arena like Simplex.
Like the Lock Ness monster and Big Foot, Alphacution has found evidence of crypto PFOF...
Alphacution expands upon an outstanding analysis by BestEx Research on PFOF with additional context on price improvement by leading wholesale market makers.
"There is nothing to writing. All you do is sit down at a typewriter and bleed."Ernest Hemingway Tuesday, April 6, 2021 was a good day for Alphacution in the press... The morning started with a feature by Bloomberg Editor Tom Maloney, "Citadel Gets the Spotlight," wherein he tells the story of Ken Griffin and Citadel Securities' rise as major trading force in the post GFC landscape and - most notably since GameStop - as a recent focal point of politicians and regulators. (I'm sure Ken is not thrilled with the title image.) Here at Alphacution, this article will be remembered primarily for two things: First, for providing a few useful financial tidbits - and, second, for placing a few of our words in the largest font in our history to date - Should it have been "Amazonization" or "Amazonification"? Either way, you get the gist... One more thing on this: I may have told this tale before, but after throwing an unsolicited sharp elbow in Tom's direction in our December [...]
Leveraging numbers and narrative, Alphacution builds a higher-dimension analysis of market structure mechanics on top of Bloomberg Opinion's Matt Levine's recent manifesto on payment for order flow (PFOF). Disclaimer: No unsolicited elbows were thrown during the creation of this Feed post...
"You cannot escape the responsibility of tomorrow by avoiding it today."Abraham Lincoln With protestors storming the U.S. Capital - some of which breaching the outer doors and freely strolling the U.S. Senate floor - as surreal and unprecedented backdrop, I sit down to organize a sketch of Alphacution's outlook for the year ahead, starting with a very wide lens: The U.S. economy - much like the rest of the other "developed world" economies - is naturally weaker than the meticulously curated employment and productivity numbers suggest. Technology adoption (from workflow automation to social media distraction), growing debt burdens, ossified resource allocation practices, cross-region labor arbitrage, deteriorating infrastructure, and other factors all converge to deteriorate "life, liberty and the pursuit of happiness" for a growing portion of the population. The COVID pandemic of 2020 - and however long it remains disruptive throughout 2021 as vaccines are being rolled out - acts as an accelerant of many of these factors. Ours is a deteriorating version of capitalism. Symptoms emblematic of the stage [...]
"The difficulty lies not so much in developing new ideas as in escaping from old ones." John Maynard Keynes Just because the rule requires “market centers that trade National Market System (NMS) securities to make available standardized, monthly reports containing statistical information about covered order executions that are free and readily accessible to the public" does not mean that that information is lounging around under a bank of Klieg lights in an easily consumable format. Like a lot of raw regulatory data, you need to know where to look while simultaneously in possession of a decoder ring... Meanwhile, there is a dramatic falling of US equity market dominoes that began a year ago with an industry-wide move to zero-commission retail brokerage models. This move became exacerbated in March by a convergence of pandemic-related forces that has resulted in a gusher of unprecedented profitability for a short list of leading proprietary trading firms that are otherwise known in the light of day as wholesale market makers. At the intersection where [...]
“No matter the outcome of the struggle between China and the U.S. over video-sharing app TikTok, an unlikely winner will be a secretive trading firm based outside of Philadelphia.” – by Wall Street Journal reporters Rolfe Winkler, Jing Yang and Alexander Osipovich. Alphacution contributes analysis to Wall Street Journal story on legendary option-trading powerhouse, Susquehanna International Group’s ownership interest in ByteDance, the Beijing-based owner of video-sharing social media app, TikTok, “Secretive High-Speed Trading Firm Hits Jackpot With TikTok” (October 1, 2020). Additional related analysis on share of option markets in Alphacution’s Feed post, “Runaway Concentration Risks is US Option Markets.”
“The future is a choice between utopia and oblivion. Whether it is to be utopia or oblivion will be a touch and go relay race right up to the final moment…” – Buckminster Fuller On September 23rd, the Financial Times reported, “Citigroup halts market making in retail options” in an apparent response to the challenges brought about by the era of zero-commission retail trading; an era that is swiftly nearing its one year anniversary. Among the more notable impacts of this Citi news, the fact that Morgan Stanley now remains as the sole major Wall Street bank still standing as an intermediary for retail option flows ranks high. Truth be told, it ranks second only to a backdrop of creeping concentration as bulge players like Citi and Barclays before them and Goldman before them and others before them – including those that have been winding down their cash equities businesses – have punted on their options businesses because it has become so mind-numbingly complicated and expensive to make money in [...]