The ASX’s decision to keep its key options trading service out of action for at least another two weeks has prompted traders to criticise the market operator for charging them fees for no service.
With the ASX confirming on Thursday that the Tailor Made Combinations (TMC) function will not be made available before December 17, a major expiry date for options contracts, traders warned the prolonged outage was costing investors money.
A market maker working for a global firm, who could not be named because he was not authorised to speak to the media, said his firm pays around $400,000 per year in connectivity fees and called for these to be suspended while the “backbone” of the system was down.
“The market making community, we’re so over it. We pay extremely high prices to connect to this market,” he said. “And we’re making way less money than what we should be.”
He said the communication from the ASX had been “abysmal” and some staff had given indications the service might be suspended permanently.
Another senior advisor at a top Sydney firm, who could not be identified also fearing backlash from the ASX, said the TMC outage was “killing my business”.
“This is my livelihood,” he said. “They’re basically charging a fee for no service.”
The advisor said the ASX’s mandate is to “run a fair and equitable market” and the lack of information about when the TMC will resume was “rubbish”.
“It is not a fair and equitable market where they won’t tell us what’s going on and you can’t trade through their system,” he said.
However, an ASX spokesman said a plan for reviving the TMC will be released “shortly” and fees would not be suspended in the meantime. “Customers can still trade options on the platform and we have made rule adjustments to help customers manage their positions effectively during this period.”
The TMC service allows brokers to enter multiple options orders that work together to achieve the best price and reduce risk.
Options contracts expire at regular intervals, with December being one of the biggest months, and traders can use the TMC to roll or close the contracts at the best price. Without the TMC, traders have to manually trade individual legs, which exponentially increases the risks.
According to the ASX, a software glitch within the TMC shorted the whole system, causing the third major outage in nine years. The ASX is now being investigated by the Australian Securities and Investments Commission for breaching its legal obligations.
Sydney class action specialist firm Quinn Emanuel Urquhart & Sullivan is also investigating whether investors who lost money during November 16 trading outage have a case for compensation.
A senior investment advisor at a top Melbourne broking firm, who also spoke on the condition of anonymity, said there could be a separate class action for investors losing money due to the ongoing TMC outage.
“It really is something that is substantially disadvantaging clients,” he said. “I looked at a position today, and I’m just unable to trade it. The markets, the prices are moving around and I just can’t afford to take that risk.”
“Normally you don’t turn business away. But in the options market, this is a worst case scenario,” the advisor said. “You’re putting yourself and your clients in a position where they will almost certainly be disadvantaged.”
An executive at a Sydney-based firm, who spoke on the condition of anonymity fearing backlash from the ASX, said he could not comprehend why the system needed to remain suspended a month after the November 16 crash.
“ASX do gouge fees, they should stop charging any fees. It’s costing us a lot of money not being able to do business,” he said. “But the main point is why can’t we go back to a version that did work?
“There’s something happening within the ASX and someone is not telling the truth.”
The ASX spokesman said the market was now connected to a new version of ASX Trade which included a complete upgrade of software and hardware “other than TMC functionality”.
Source: Thanks smh.com