Friday, April 11, 2014

Creating Change from the Inside Out

If you've been following TT recently, you know 2014 is already shaping up to be a year of significant change. In the past two months alone, we've:
  1. Welcomed a new CEO, Rick Lane
  2. Launched a new brand identity
  3. Revealed Nextrader, a streamlined, go-anywhere trading ecosystem that should be in full production by year's end
This week we reached another significant milestone, the unveiling of our newly renovated Chicago headquarters. 

One of the primary objectives of this renovation was to create a space where our team could engage, collaborate and freely exchange ideas—an environment where our talent feels empowered and willing to take risks. We know that inspiring our people to be at their best is the most surefire way for TT to deliver compelling solutions for our customers.

A great deal of thought and effort went into planning this exceptional facility. In fact, I think it's more impressive than many of the spaces developed by other tech companies in Chicago. 

What’s equally impressive is that we kept out-of-pocket costs to a minimum by doing the renovation in conjunction with our recent lease renewal. As a TT shareholder, this is my favorite part!

Pictures from the internal event celebrating the unveiling of our newly renovated space.
The dramatic two-story, multi-purpose space serves as kitchen, lounge, game room, meeting space and...wait for, with a constantly changing selection of six craft beers plus two wines on tap.

The bar is particularly noteworthy. It's constructed entirely of reclaimed materials, including wood from a grain elevator built in 1887. At the time it was completed in Duluth, MN, it was the largest grain elevator in the world. It stood intact until about ten years ago, when crews began to deconstruct and salvage the wood. I think it's pretty special that purely by chance, we stumbled across materials that are historically significant to our industry and ended up incorporating them in the structure of our bar, which is where I'm sure many new ideas for our industry will be born and nurtured.

Wednesday, March 26, 2014

Order Passing in the Kingdom of Trading

As part of writing this blog describing TT's new order passing functionality, I went to the Internet, curious to see how the trusty Merriam-Webster dictionary defines the word “pass.”

Not surprisingly, most of the definitions are unrelated to passing an order, and you have to go all the way down to the seventh entry to find a definition that even closely aligns with the trading world:

“Pass: (7)  to go from the control, ownership, or possession of one person or group to that of another <the throne passed to the king's son> ... “

While passing an order to another user or execution desk does involve the concepts of ownership and control, for complete accuracy I have to admit (with tongue in cheek) that order passing is just slightly different from the succession process in a monarchy.

The Basics
Order passing allows traders to pass the visibility and management of open, working orders to another trader or group of traders. TT refers to the secondary group of traders as the Caretaker group.

  • The two execution groups do not need to officially share their order books; the passing action adds temporary visibility and management of the order to the other group.
  • While the order is being watched by the Caretaker group, the order originator and all traders sharing an order book with the originator have full visibility of the current order status, and see all updates and partial fills as they occur.
  • Control of the passed order is shared by both sides, allowing either side to take immediate action on the order as needed.
  • Orders are passed on TT using a push model -- a trader initiates the pass to another group. Traders cannot simply pull an order out of another order book that they do not share.
  • No special passing server is required; passing is built in as a native capability of TT’s core messaging architecture, with no impact to order throughput performance.

Seamless Process
It’s important to mention that there is no disruption to an order during the passing process. Passed orders continue to work in the market and maintain position in queue during the passing action. Orders can be passed individually or in bunches. On the TT platform, a trader or broker can pass their entire order book, containing hundreds of orders, with just two clicks of the mouse.

On the TT platform, order passing is initiated with two mouse clicks.
Brokerage desks typically pass large orders that need to be worked over several trading sessions. A sell-side brokerage desk may execute customer orders during their local trading day, while also operating a separate global support desk that is staffed 24 hours a day. At the end of the local session, the day desk may have unfilled or partially filled orders still working in the market. They pass oversight of those orders to the global support desk, and then reclaim ownership of those orders when they return to work the next day. This high-touch aspect of continuous order monitoring is a highly valued service to their clients.

Not Just for Brokers
Buy-side firms also benefit from order passing. A buy-side execution desk can pass oversight of its working orders to a sell-side support desk to supplement the times when the buy-side desk is not staffed internally. Alternatively, a buy-side firm may staff multiple internal desks to provide around-the-clock 24-hour coverage and pass orders among the desks for constant management and monitoring.

Proprietary trading firms regularly have unfilled orders that over time acquire a favorable position in queue. They can take advantage of the non-disruptive nature of the passing action and pass oversight of those orders to an internal night clerk. This ensures that a set of eyeballs remains on the orders while the prop trader temporarily slips away for a useful endeavor known as sleep.

Order passing is available on TT even if you are not in line for the throne. Please contact your Account Manager or local TAM if you would like to utilize this new functionality.

Thursday, February 27, 2014

The Adventure of the Missing Algos

I was amused by the recent flurry of media releases proclaiming the adoption of algorithmic trading in derivatives markets. Pay no attention to the man behind the curtain, could this be important new information that somehow leads us to enlightened trading? Or is it the case there is nothing more deceptive than an obvious fact? The latter are the words of one well-known sleuth, whose Watson would likely retort, “No kidding, Sherlock,” or something roughly comparable.

The infamous Sherlock Holmes
Avoiding the temptation to offer my own breaking insights, such as The Internet is here to stay! and Mobile communications expected to take off!, I will instead stay the high road, eschewing mirthful gratification for the sake of propriety. As our sleuth would advise, if you eliminate all other factors, the one which remains must be the truth: while other vendors are merely talking about algo trading in derivatives, Trading Technologies has been delivering for several years. I am therefore tickled pink that other vendors are now “discovering” this space. The algos are not missing, they are here. In production. Today.

One of TT’s first algorithmic solutions was our hosted Autospreader® Strategy Engine (SE), which is a very-low-latency computational server for executing synthetic spread algorithms such as calendar rolls, synthetic strips, butterflies and condors. Recent enhancements to this system include intuitive rule building for customized handling of pre- and post-trade hedging, as well as conditional participation and synthetic sniper spreads.

The Autospreader SE product is complemented by TT’s Synthetic Strategy Engine, another proximity-hosted server that provides a suite of algorithmic order types, including synthetic icebergs, TWAP, POV and triggered algos such as stops and if-touched orders.

Friday, February 14, 2014

Social Media and Trading

The use of social media within the trading industry is prolific, with an array of different applications. Instant access to news and opinion drives traders to outlets like Twitter as we push to know as much information about our products as possible—and know it before it hits the traditional news venues.

The fact of the matter is that news flows through Twitter faster than network television. Viewership of broadcast outlets like CNBC continues to diminish, while online social outlets like Twitter are adding to their participation base every day. This is due to both the timeliness of the news as well as the trust levels earned among traders within communities of Twitter and the Twitter derivative, StockTwits. This trust is reminiscent of the trust among traders in the pits from where many of us began. Trust developed through years of sharing the same space and relying on others to know their word is their bond and your trade with them will stand.