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Who Needs Another Multibroker Execution Platform?

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Just a Little History


“Who am I? Why am I here?”


– Vice Admiral James Stockdale

A “multibroker solution” can be broadly defined as a trading platform that provides the buy side with the ability to execute and clear with multiple brokers, preferably from a single screen.Over the years, there have been many reasons for TT to offer a multibroker solution. The beginning of the 21st century was a boom time for commodities and futures markets. During that period, the biggest challenge for a trader seemed to be how to capture a piece of the ever-growing pie, in an environment where trade volumes would go up for the foreseeable future. Even the occasional bump in the road didn’t seem to slow anyone down for long. The more relationships you had, the wider you could reach to gather in the bounty.

But it was by no means an easy road. The barriers to multiple broker relationships were many:

  • Some brokers could be accessed only via their proprietary single-broker offerings.
  • Multi-asset, multibroker platforms lacked advanced futures trading functionality.
  • Software vendors (like TT) had solutions that were “broker-neutral”, but still required separate infrastructure for each broker.
  • Each broker presented unique back- and middle-office integration overhead, especially with regard to Financial Information eXchange (FIX) protocol integration.

In spite of the costs and complexity, those firms with enough resources to apply to the problem simply forged ahead with handcrafted multiple-broker integration, sometimes supporting separate software solutions for as many as half a dozen different futures commission merchants (FCMs). When it came to the multiple broker club, many small or even mid-tier buy-side firms were left on the outside looking in.

Over the years, TT has done a fair amount of talking about a multibroker solution. We made a couple abortive attempts at trying to bolt-on multibroker functionality to our existing system. But for the most part, TT focused its R&D resources on expanding trader functionality and market access. Our 7x platform was solid and time-tested. In most cases, FCMs managed their TT infrastructures with only occasional guidance from TT. Yes, TT dipped its proverbial toe in the hosted-solution water with TTNET™. But TTNET only aspired to provide the same type of TT infrastructure management that most FCMs were already doing–basically a competent but cookie-cutter approach, with a few efficiencies gained due to shared infrastructure, best practices and proximity to TT support. Not much progress was being made on the multibroker front at TT.

Then in 2008, the unforeseeable happened.

Consolidation, Consolidation, Consolidation

“There are only three things that matter when it comes to property: location, location, location.”
      – Unknown

The events of the 2008 crash are well known; we won’t review them here. From our perspective, the crash brought a number of critical issues to the forefront:

  • Broker risk: Anyone with just a single broker relationship now wanted two; those with two now wanted three, etc. On the other hand, those with six might cut back to five, or even four. It’s no longer just about maximizing profits, but insuring survival.
  • Regulatory risk: As an industry, we’re still coming to grips with the impact of Dodd-Frank and ESMA regulatory changes. The demands that these changes are placing on FCMs and the buy side are a driving factor in system consolidation.
  • Opportunity risk: Near-zero interest rates and reduced trade volumes mean FCMs are keeping a much tighter rein on which buy side firms are worth the cost and effort to support on a trading system.

At TT, we continued to talk with our end users about these issues. Internally, we had many debates and brainstorming sessions about how to attack various pieces of the new puzzle. About two years ago, the case for a multibroker application service provider (ASP) solution at TT became so compelling–seeming to solve so many of the disparate problems with which our end users were being faced–that we stopped trying, and started doing (apologies to Yoda): we decided to transform our current single-bank platform into a multibroker architecture, starting from the bottom up. So let’s talk about what TT’s multibroker solution is.

What is the New TT MultiBroker Solution?

“It’s a little room in the front of the plane…but that’s not important right now.”
– Leslie Nielsen


Aptly enough, we’ve named our solution MultiBroker. We started by taking a new approach in TTNET, introducing an ASP model for MultiBroker that allows TT to fully manage and scale the trading infrastructure as trade volumes dictate. We are starting to take advantage of cloud resources to help scale the less latency-sensitive components of the system. We believe that an ASP approach will help us take any barriers to entry for our MultiBroker end users down to the bare minimum.Under the software covers, we made precise changes from end to end in every TT component to accommodate the order-routing demands of MultiBroker, while at the same time matching or exceeding the performance and feature set of our existing platform. Buy-side firms will be able to integrate with a single FIX interface across all brokers for back-office and compliance reporting. We kept the visible changes in X_TRADER® and the APIs to a minimum to keep the learning curve low for our current traders and to retain the clean and fast trading style for which TT is so well known.

We are pretty proud of the end result. The MultiBroker solution has been routing live trades in our alpha environment since late summer. Early reviews from both the buy side and the sell side have been enthusiastic, and I am equally enthusiastic. As we move on to beta and ultimately to production in the coming months, you can track progress on our MuiltiBroker initiatives webpage, or in my future blog posts.

X_TRADER® Named Best Buy-Side Commodities Trading Platform

It is a great honor for Trading Technologies’ X_TRADER to be named “Best Buy-Side Commodities Trading Platform” in this year’s Buy-Side Technology Awards. The award, which recognizes “the leading technologies and vendors in their area of expertise, through an auditable and transparent methodology underpinned by the input and experience of six judges,” was announced at the sixth annual Buy-Side Technology Awards in London on Friday.

The 2012 award is a significant accolade for TT in a period of increased agitation and uncertainty for our industry. That our platform was chosen from a large field of worthy competitors is deeply satisfying to all of us at TT.

At the core of our philosophy is the simple idea that everything we do, from providing exchange connectivity and hosting services to designing world-class algorithmic design tools, centers on the end user. Although our system addresses the needs of many constituents, including regulators, exchange operators and broker trading and operations staff, it is ultimately the buy-side end user who dictates whether we have succeeded. And with buy-side users facing new regulatory and market hurdles, they need an execution platform that provides superior performance and dependability as well as compliance with existing and emerging regulatory requirements.

Why Go Out on a Limb?

Because, according to Will Rogers, that’s where the fruit is. The futures industry exists because of risk, and unlike “capital markets,” where securities are issued and sold to generate business capital, futures are primarily about risk mitigation. But while you can hedge oil consumption or metals prices, certain forms of risk are harder to identify and mitigate.

Take, for example, the risks inherent in rapidly evolving regulatory requirements. With new regulation spanning a variety of derivatives and trading operations, today’s buy-side user faces a growing wave of change that makes forecasting near-term events, let alone the distant future, increasingly difficult. With the Republican presidential candidate vowing to repeal Dodd-Frank, there is certainly a lot that remains up in the air.

Regulatory change is moving at such a rapid pace that some observers speak of “regulatory arbitrage” as a potential response to ambiguous or overreaching legislation. Derivatives trading has never been simple, but the onslaught of new challenges overlaid on market participants adds even more complexity to the business.

Then there are the debacles. Things that were simply given in the past, for example, thinking of established brokers and customer funds as the trading equivalent of bedrock, have gone out the window, and the buy-side must now hedge previously unthinkable scenarios. Who could have predicted established brokers such as MF Global and Peregrine would disappear virtually overnight?

In light of the post-crisis climate, the need for trading system stability and flexibility has never been greater. More than ever, buy-side traders are demanding reliable, flexible and compliant trading capabilities to keep up with an ever-changing landscape.

In awarding the 2012 Buy-Side Technology award to TT, the judges had much to commend their decision. For buy-side firms needing to run their derivatives book while safeguarding both their assets and their reputation, our clients tell us the TT platform is second to none. TT’s comprehensive risk controls provide system-wide exposure and P&L limits to ensure that all orders are validated and managed against pre-trade limits in real time without exception, and without compromise to our microsecond-level performance. The Synthetic Strategy Engine allows buy-side traders to create broker- and exchange-neutral synthetic orders for finely tailored execution management, and our new ADL™ allows them to build proprietary alpha-seeking and execution algos that are also broker neutral. The TT FIX Adapter provides a robust means of integrating third-party order-management and middle-office systems with TT, and allows buy-side portfolio managers to stage orders directly from their OMS to TT’s X_TRADER for immediate execution or care order handling.

We Live in Interesting Times

Old curses of questionable attribution aside, we do in fact live in a much-changing world. Markets, products and rules now evolve at a dizzying pace. TT recognizes that buy-side traders are facing more challenges, and to this end we continue to develop flexible and trustworthy capabilities for buy-side traders worldwide. We are grateful to have been selected to receive this year’s award from Buy-Side Technology, and remain ever-committed to providing superior capabilities to our buy-side end users.

Order Staging for the Buy Side

By way of introduction, my role at TT has involved me in a number of strategic initiatives including proximity trading, synthetic orders, Financial Information eXchange (FIX) protocol and application programming interfaces (APIs).

Most recently I’ve been holding discussions with a variety of firms to further enhance the capabilities of our system for buy-side traders and portfolio managers. In this role, I’ve had the pleasure of speaking with some key players in the buy-side community.

Of course, the term “buy side” itself refers to a fairly wide swath of business models, ranging from asset managers to hedge funds. But despite the breadth of the buy side as a whole, a growing number of buy-side users is demanding the option of a high-touch capability in a world otherwise driven toward low-latency, low-touch trading.

All the World’s a Stage



Staged Orders in X_TRADER®

Order staging, which involves the creation of staged or “care” orders, is in some ways an idea that’s as old as agency trading itself. Although they weren’t called care orders at first, care orders started as a voice call to a sell-side trader over telephones and squawk boxes. As technology marched forward, the vehicles for submitting care orders evolved to include faxes, followed by emails and instant messages.

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Why X_TRADER®?


Every time I meet with customers I ask them the same question: “Why do you use X_TRADER?” Some sample responses:

“Because of your spreader.”
“It’s the most reliable system I’ve ever used.”
“Your automated trading is second to none.”
“You do spread charts the right way.”
“It’s flexible. I can configure it the way I like.”

This is a biased sample, of course, since the traders I ask are already using X_TRADER. But the answers are revealing. And there is a strong underlying theme to the replies.They use X_TRADER every day for one simple reason: Because it is very good at what it is supposed to do.

Forgive me if this sounds like boasting, but, hey, I’m just reporting what I hear as the X_TRADER product manager. And after all, this is a TT-sponsored product blog. 🙂
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