Thalmann Commodities Acquires X5 Markets for Block Options Crossing

Zurich, Switzerland, March 30, 2011 --(PR.com)-- Thalmann Commodities (www.thalmanncommodities.com), a leading Independent Broker Dealer based in Zurich, acquired the assets of X5 Markets, known for developing the first block options execution system. Financial terms of the transaction were not disclosed.

The acquisition moves Thalmann Commodities into a new asset class, equity options, which is a derivative that is based upon the underlying stocks held by its institutional clients.

Based in Zurich, Switzerland, X5 Markets, headed by founder and CEO Jean Blanc, a pioneer in algorithmic trading at Digue Systems and then at Azure Finance, launched an options crossing platform in February of 2007.

"We're interested because we know that our clients are telling us that they are beginning to use options in ways other than just selling calls to generate income," says Walter Mayerbach, Thalmann Commodities’s executive director of business and product development. While many mutual funds have been selling calls for a long time, some institutional clients are using more sophisticated strategies and using them as a substitute for long positions, says Mayerbach. "We wanted to understand the interactions of the equity markets and the equity options markets," says Mayerbach.

In the same way that Thalmann Commodities' wholesale block trading system provides a mechanism on the equity side for protecting institutions from information leakage or the switching engine goes out to traditional markets with technology that obscures the order from pattern recognition software, or sends out encrypted messages via its blotter liquidity model (rather than scrape the blotter), X5 Markets' software is also protecting the institutional equity and options orders, said Mayerbach.

According to Mr. Blanc, X5 was always directed towards the growth of the use of options by traditional asset managers, specifically, an institutional investor with $1 billion in assets. Since Thalmann Commodities is reaching all the equity managers, those are the same folks that are beginning to trade options more and more. But an asset manager of that size, would have one million to three million shares in any given name, which name they'd need 20,000-to-30,000 contracts. "Those are block options. They have not had an effective way to trade that today," says Mr. Blanc. "The market is well aware whoever buys that 30,000 contracts is going to have to hedge themselves in the equities," said Mr. Blanc. "That is where the front-running occurs," he added.

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