All posts by Trading Technologies

This is the second half of a two-part blog post based on my interview with FOW magazine regarding the growing adoption of cloud computing within finance and trading. If you read part one already, thanks for coming back. If you missed it, you can read it here.

FOW: What prompted the decision to move the platform on to a cloud-provision basis?

MM: We made the decision to leverage the cloud because of the many benefits it will provide to our users. One of the biggest benefits of cloud services is accessibility. Users can access the TT platform over the Internet through a browser, desktop or mobile device.

Distributing software via a cloud-provisioned platform also provides users with significant secondary benefits. In a SaaS model, the provider has direct control over the user experience. In our next-generation platform, for example, we are able to tune our application and infrastructure for the highest performance because we operate the solution end-to-end and across technology stacks.

Additionally, SaaS is more operationally efficient from the perspective of the service provider. SaaS allows for uniform service deployment and operation and direct visibility into the state of services. We directly monitor the application and infrastructure 24×7, which gives us deep visibility into system performance and helps us anticipate and prevent impending problems. When there are issues, we can roll out fixes to our global user base in a matter of minutes. This level of manageability and support is difficult, if not impossible, to achieve for an ISV supporting many bespoke on-premise deployments.
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Recently I was interviewed by FOW magazine about the growing adoption of cloud computing in finance and trading. As we are both a provider and consumer of cloud services, we have an interesting, credible perspective. 

Our next-generation trading platform, which we are simply calling TT, is delivered via software-as-a-service (SaaS) and underpinned in part by third-party cloud services. FOW’s questions were provocative and on point given the many conversations I and others at TT have held with our customers in preparation for launching our next-gen platform. I thought it was worth recapping the interview in a two-part post for our blog readers.

Part one is below. Look for part two here next week.

FOW: What demands are you seeing from clients that reflect the current trends/state of play in the market?

MM: Our customers continue to put downward pressure on trading technology costs while demanding expansion into new markets; these seem to be perpetual trends. Outsourcing of the trading infrastructure is now a more attractive option due to the lower cost of a shared solution and the reach of networks into global markets. Moreover, a larger pool of firms now sees outsourcing as an attractive option due to the ubiquity of low-latency performance, improved understanding of security in the cloud and increased reliability of cloud solutions.

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interns at lincoln park zoo
Our summer 2014 interns (L to R): Ian Torres, Purav Shah,
Stephen Herring, Everett Hu, John Lefkovitz, Joshua Alley.
We recently concluded our first official summer internship program. While we’ve had students interning with us in the past, we wanted to make this summer a more formal (and fun!) experience.

Our internship program goals are similar to the TT University Program, which provides free access to our trading platforms, APIs and expertise to more than 50 universities around the world. The main goal of the University Program is to educate and mentor the next generation of financial leaders by donating our expertise and technology to universities worldwide. Whether the students are studying finance, computer science, engineering and/or economics, we want them to understand how to use trading software in a safe, efficient way.

The goal of the paid internship program is to provide top students on summer break the opportunity to contribute enhancements that make our software even better, which in the process helps them become more advanced programmers and developers, and to enhance their understanding of the financial markets.

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Informatica recognized TT as an
Innovation Award Finalist in the
Embedded Applications category.

Last week Informatica hosted its annual customer conference, aptly named Informatica World 2014, where TT was recognized as an Innovation Award Finalist. I was lucky enough to attend the conference and accept the award on behalf of TT.

Although these types of vendor-sponsored awards are typically just marketing exercises for all involved, this was a different experience in my opinion. After speaking with various groups within Informatica, including their marketing team, as well as other conference attendees, it was obvious there was a genuine interest in and recognition of the innovation going into the development of TT’s recently unveiled next-generation trading platform.

I didn’t expect people to be very interested in us because we’re not a giant global enterprise like the typical Informatica customer. Informatica provides data integration software and services to a client roster that includes some of the most widely recognized companies in the world. Their products include the Ultra Messaging (UM) product suite, which we’re using in the new TT platform. In retrospect though, I guess the response shouldn’t have been so surprising since the conference was heavily focused on cloud and big data. In particular, many discussions focused on the challenges of getting real-time data into cloud-based data warehouses; we faced similar challenges when designing the new platform.

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Have you ever wanted to buy something in one location to sell it in another location at a higher price? Imagine buying gold on CME only to turn around and sell it on TOCOM at a higher price. This type of trade is known as geographical arbitrage.

While there is risk in every trade, geographical arbitrage is relatively low risk. The faster you can execute and the more alike the underlying products, the better the arb. Gold as an underlying makes for an almost perfect hedge, as the gold quality is identical. This is not true for most other commodities.

One major factor here is the two products are priced in different currencies. A currency conversion is required, and this conversion value is not static like some other conversion factors used for spreading. For example, in this spread, I will use a static conversion of 1 kilogram equal to approximately 32.15 troy ounces. This value will not change during my arb, but the dollar-to-yen ratio will.

Let’s begin by calculating how to set up this trade. I will convert the yen-to-dollar using 6J on CME and grams to troy ounces. Below is a table that shows this conversion to get TOCOM gold priced in U.S. dollars and troy ounces.

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