All posts by: Mike Forst

Order-Cross Prevention on TT: Come and Get It

Source: Nanex
Source: Nanex

Not long ago, we published the blog post All Washed Up: Putting an End to Self Trading. We’ve since officially released our order-cross prevention functionality on TT, which provides users with the option to transfer a position when two opposing orders within the same group match on price.

We’re excited to make this feature available to our users, and we’re already working on enhancements. For example, within a few weeks, we’ll provide the ability to match exchange spreads and synthetically generate the spread and leg fills for each account.

As mentioned in my last blog, stay tuned to learn more about this feature as we continue to iterate and roll out new enhancements. In the meantime, feel free to reach out to us to learn more or to schedule a product demo. Or try TT yourself at trade.tt—it only takes a few seconds to create a free demo account.

All Washed Up: Putting an End to Self Trading

Last week the CFTC issued a report detailing the flash crash experienced in the U.S. Treasury cash and futures markets on October 15. The report highlighted the lack of a “smoking gun” culprit as the cause of the sudden and dramatic price swing witnessed in these markets. Instead, it pointed the finger at a culmination of many factors, including downward pressure on yields leading up to the event combined with an economic data release which contradicted the market’s expectations of a rate increase. It also highlighted another phenomenon prevalent in today’s highly automated markets: self trading.

Technology to Blame

According to the CFTC report, nearly 15% of all transactions were “wash trades” during the period in question, meaning the same person—or two people trading the same account—represented both the buyer and seller on a trade. While this is an incredibly high percentage, what is more troubling is the fact that the average daily percentage of self trading on the cash Treasury markets is nearly 6% of all volume according to the agency’s report. Even though wash trading is typically forbidden in futures markets, it is nevertheless a common occurrence as trading systems and strategies grow in complexity and capabilities.
Source: Nanex

Many exchanges have built self-match prevention measures into their matching engines, but they are an “opt-in” feature and are largely considered a blunt instrument trying to solve a more nuanced problem. Self-match prevention is also increasingly under the regulatory microscope due to its role in facilitating spoofing: the assumption goes that if a spoofer is really looking to sell, he or she can put a large bid into the market to encourage other buyers to join and then sell through the level he or she was bidding. This has the effect of creating the necessary size into which the trader can sell while relying on the exchange to safely cancel the resting bid when self-match prevention is enabled.

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#PreviewTT: Comprehensive Risk Management Capabilities

Last week, #PreviewTT showcased some of the risk management capabilities that are built into the TT platform.

TT couples familiar risk-management and user-administration functionality, including popular risk controls, with significant enhancements. For example:

  • Administrators can customize their own account hierarchies to apply controls at any number of levels within those hierarchies or apply them directly to users.
  • FCMs can provide firms with administrative access and give them control over the limits and settings on their sub-accounts without giving up control of aggregate risk limits.
  • Trading firms can have their own administrative access to TT, with fine-grain control over the limits and settings on their own accounts and sub-accounts, even when positions get reset.
  • Limits can be set per user as well as per account/sub-account. All limits work in conjunction with each other and must be approved before an order can be sent to the exchange.

And just like the trading application, the risk management and user administration apps are accessible via mobile devices.

Below you’ll find the content we shared last week on Twitter. It includes a video that highlights some of the key enhancements plus many product screenshots.

Starting tomorrow, we’ll talk about the TT platform architecture and benefits it delivers to our users. So keep following @Trading_Tech and #PreviewTT.
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#PreviewTT: Gaining Access

If you follow us on Twitter, LinkedIn or Google+ or if you get our newsletter, you probably already know that we’ve begun to preview some of the noteworthy functionality that will be available in the next-generation platform, which we are calling, simply, TT. You can easily find this content on Twitter and Google+ by searching for the hashtag #PreviewTT.

Last week, we showed how easy it is to get started with the new platform. The software-as-a-service (SaaS) delivery model makes it possible for firms to onboard new users in a matter of minutes from virtually any internet-connected computer, and the process is just as simple from the user’s perspective. Since the new platform doesn’t require a software install, a user with an established FCM account can typically begin trading on TT immediately after accepting an online invitation.

This is exciting news for our customers, some of whom are now starting to experience these benefits firsthand as we accelerate rollout to early-stage users.

Below you can see the content we shared last week on Twitter. This week, we’ll be spotlighting the unique aspects of workspace creation and access.

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