The operational costs of managing and maintaining a professional trading platform and the capital investment required to stand up the necessary infrastructure to support such a platform are substantial. This is particularly true for our TTNET™ hosting service, which provides the expansive functionality and robust performance of TT software along with global reach that spans the world’s major financial markets.
The value proposition for customers of TTNET is the transfer of a significant portion of the aforementioned costs and risks to TT, while at the same time procuring higher quality services with lower overall costs than they could do on their own. It’s a similar value proposition of most service providers across all industries.
Our clients who utilize TTNET tell us they prefer our hosting services because it combines the advantages of our world-class, professional trading software platform with the advantages of a highly available, purpose-built infrastructure. An infrastructure deliberately tailored to meet the needs of professional traders, with attributes that include bare-metal computing performance, dedicated and performant connectivity options, and hosting proximity to, or even co-location with, major trading venues and other financial markets partners.
Providing these benefits, though, comes at a cost premium over more general-purpose IT hosting venues. And while we believe these benefits are in the best interest of our end users and worth a premium over lower-cost alternatives, we don’t believe our current implementation, execution and standard service offerings are as efficient or relevant as they could be, irrespective of the constraints of our current software platform. In short, there is room for improvement in both cost and quality.
The prominence of cloud computing in mainstream IT is accelerating the maturation of many IT technologies, and it is leading to better tools for automation and service deployment. But it’s also helping to dispel many industry misconceptions about the security, reliability and performance around three fundamental technologies of “the cloud”: multi-tenancy, virtualization and Internet connectivity—three fundamental technologies that are also fundamental cloud tenets because they directly impact scalability (and consequently cost).
Like all technologies, cloud technologies have their own challenges and limitations. But when applied intelligently and to the right problems, they are viable and cost-effective tools, even for our industry (see: NASDAQ and NYSE Technologies).
Those familiar with TTNET know that we’ve been leveraging many tenets of the cloud for a while now. In retrospect, TTNET is effectively a private cloud and has been since its inception. And while we plan to leverage cloud paradigms, cloud technologies, and even private and public services extensively in our next-generation platform, we’re not waiting for it to arrive before we take advantage of changing perceptions and extend our use of fundamental cloud tenets.
Historically, TT has only offered dedicated broker environments—meaning an end user in TTNET could only trade through one broker if he had a single X_TRADER® screen. But soon, TT will begin offering MultiBroker service to TTNET clients through a multi-tenant version of TT’s futures execution platform.
Designed as a single execution environment for traders supported by multiple brokers, MultiBroker is TT’s first foray into offering a true application-level, multi-tenant service. Multi-tenancy is a concept that can be applied to any layer of the IT service stack, from the physical layer of shared data center facilities (e.g., power, space and cooling) all the way up to the application layer serving user transactions. Typically, the further up the stack a service provider goes, the greater economies of scale that can be achieved. With MultiBroker, we are going way up the stack.
In addition to the commercial benefits MultiBroker will bring to our client base, its multi-tenant design will greatly enhance the scalability and efficiency of this service offering for both our customers and end users. And now, with the majority of our platform supporting multi-core technology, even greater scale can be achieved while maintaining competitive execution latency and efficient throughput scalability.
Our customers and end users who continue to utilize our original single-tenant hosting option in TTNET will not be left behind, as we are looking at improvements there as well. Today, TTNET uses virtualization technology and tools to support a number of management systems, but only for a very small percentage of trading-related applications, and only where functionality is out of the trade execution data path. Going forward, we plan to leverage virtualization technologies to support mainline trading applications in failover and disaster recovery situations where availability is paramount, but where some compromise in performance is acceptable. But even in the case of failover, by retaining the host’s proximity to the trading venue, we anticipate better performance than we offer today.
Finally, as our customers become more comfortable utilizing secure Internet connectivity, we are looking to transition more leased connections to the Internet. For example, we are evaluating the use of Internet as a backup connectivity option to dedicated private-line circuits without restrictions. This would result in lower connectivity costs to TTNET for our broker firms and end users. Additionally, while TT continues to expand and mature its Strategy Engine (SE) server-based execution solutions, including Autospreader SE, Synthetic SE and Algo SE, we expect more users to connect to TTNET directly via the Internet. As a consequence, we anticipate growing demand for lower-cost back-office connectivity options that offer “Internet-like” connectivity, but over a private cloud.
Look for more insights and perspectives on TTNET in my next blog. Thanks for reading.
Posted by: Mike Mayhew, CIO