Lunchtime Links: A bad omen for anyone working in market making

For traders focused on market making, it is not good. Last weekend, the Financial Times quoted 'a banker' who said that 2009 was an aberration. Since then, Deutsche Bank has revealed that its trading revenues plunged in July and August. Figures provided for us by the LSE reveal that volumes on the first 12 trading days of September were down 11% year on year.

All Options, an Amsterdam-based trading company has put the difficulties faced by traders into sharp relief. In a memo, allegedly from the company, published on this site, it argues that market making is dead and that it's closing offices and reinventing itself to survive.

Here are extracts:

As many of you know, market making, our core business model, is dependent upon volume, and volume has died out in many of our markets. Today we see an environment where technology is critical, where the volumes in the underlying stock markets are declining, where investors seek safe and secure investments, where trading is being centralized into larger blocks of trade and dark pools, or going off-exchange completely. In addition, no one can predict when the markets will recover, if at all...

What we intend to do is move away from primary market making obligations that lose us money, to focusing on sophisticated proprietary trading strategies in markets where we can gain real value, stopping loss making markets, reducing our traded-products portfolio, simplifying our infrastructure, and investing in dedicated technology.

The implication: if you want to work in trading today, you need to be at a big flow house, a quant, or a technologist.

Other links:

"On banks, I make no apology for attacking spivs and gamblers who did more harm to the British economy than Bob Crow could achieve in his wildest Trotskyite fantasies, while paying themselves outrageous bonuses underwritten by the taxpayer." (Evening Standard)

Why Vince Cable is no Marxist. (New Statesman)

Taxes from the financial services sector were sufficient to pay 57% of the health budget last year. (Telegraph)

So far, the bonus tax has generated 3.5bn. (Guardian)

TARP and other bailouts were, 'absolutely required to save your civilisation.' (Fortune)

Turner tells everyone to start being nice to bankers. (Guardian)

Michael Geoghegan threatens total tantrum unless he's made chairman. (Guardian)

Is Citigroup finally off the ropes? (Fortune)

Moyniham is installing former colleagues in key roles. (Bloomberg)

Banks including J.P. Morgan, Goldman Sachs Group Inc., Wells Fargo & Co., Bank of AmericaCorp. and Morgan Stanley are ramping up or rebuilding CMBS operations. (Wall St. Journal)

Britain to bring back credit controls (Telegraph)

The British Isles are the worst place to live in Europe. (Telegraph)

As I see it, all traders are ultimately self-taught. (VixandMore)

Nomura flushes toilets with rainwater and has moss on its roof. (SundayTimes)

The unemployed are actually perfectly happy. (Guardian)