More Awards, Exchanges and Brokers: A TT Update from the Asia/Pac Region
TT accepts the award for Trading System of the Year, Buy-Side from FOW's Will Mitting (R) at the FOW Awards for Asia in Singapore.

It’s no secret that the futures industry has been expanding in the Asia/Pacific region recently. In fact, two of our most recent Trade Talk posts have touched on that very subject: Wedbush Futures’ Carl Gilmore discussed the rising Asian participation in the financial markets, and UOBBF CEO Matthew Png gave us a wide-ranging update on the futures industry in the region. As TT’s managing director for Singapore and Hong Kong, I wanted to provide a TT-specific update on some of the new developments in the region.

A few weeks ago, we made three exciting announcements relevant to Asia/Pacific. Two of them were with regard to new brokers joining our award-winning X_TRADER® ASP solution, formerly known as MultiBroker. Both China Merchant Securities (CMS) Hong Kong and RHB Securities Singapore signed on, boosting the platform’s number of sell-side participants to over 50 and adding local expertise in key Asian markets.


Opening Roads and Carving a Path

As we release X_TRADER® 7.17, TT is opening new paths and exploring new futures trading software technology.

I recently visited Vail, Colorado to explore new paths of a different nature. Why head to the mountains in the middle of the summer? There’s no better hiking to be found, and certainly no better way to know and understand the foundation of future adventures there. Hiking a mountain while it is cleared of snow gives the advantage of understanding your base and sensing your support. It’s a slower trip down the mountain, but your route is clear and you are more assured of reaching your goal successfully and leveraging what you learned along the way.

Understanding the core needs of your current and potential customer base is critical for the success of any product. Topical knowledge of your field is beneficial, but root-level understanding of your domain is critical.

X_TRADER 7.17 brings out many solutions that the futures industry has required and, in some instances, lacked. We have trumpeted the new TT DMA MutliBroker ASP solution for months now, and uptake in the field during our beta release was highly encouraging. We have opened doors and gained traction in segments of our industry that previously maintained barriers—artificial in some instances—that kept our software outside of their reach.

X_TRADER 7.17 contains much more than a solution for routing orders to multiple brokers. We’ve addressed complex order-desk management issues that I know from my own CTA and sell-side order desk experience, and countless customer interviews will take a big bite out of the annoying statement that always starts with “My job would be a lot easier if I could...”

Game On

Jim Kharouf commented recently in the John Lothian Newsletter that the potential impact of TT’s MultiBroker solution was not due to anything remarkable about TT's technology, but rather the unique position that TT occupies in the futures industry. As product manager for MultiBroker, I spend a lot of time talking to customers about its features and benefits, things like innovative trading tools and APIs, our award-winning ADL™ visual programming platform, world-class performance, FIX integration, etc. But these features are also well established in our current single-broker offering (a.k.a. the “7x platform”). I, too, find it hard to single out any new breakthrough technology that is the enabler for MultiBroker.

In bringing MultiBroker to market, we did make a number of key changes within the foundation of our 7x platform, but by and large it is still basically 7x architecture. I confess that I find the re-use of familiar software slightly unsettling at times. Since TT is a software company, we should be producing software, and the more software we write, the better the end result, right? Not necessarily. TT’s first attempts at multi-broker functionality required a lot of new code including additional special-purpose servers, complex configurations and/or significant additional investment in server hardware. The proliferation of new moving parts caused each of these previous attempts to collapse under its own weight.

In contrast, the value of our current approach to MultiBroker is that it is an overall simplification of the TT system. By subtracting duplicative infrastructure, configuration and yes, even screens, from the trading experience, life gets a lot simpler for the traders, administrators and operational staff. In this case, the new whole is greater than the sum of the (far, far fewer) parts. Addition by subtraction works.

Such changes to the foundation of a global software platform do take considerable time, and during that time, the natural inclination of engineers is to cook up even more interesting new “features” to make end users “happy.” James Surowiecki, author of The Wisdom of Crowds, called it “the spiral of complexity.”

“You might think, then, that companies could avoid feature creep by just paying attention to what customers really want. But that’s where the trouble begins, because although consumers find overloaded gadgets unmanageable, they also find them attractive.”

The story of MultiBroker during its development has been one of a constant battle against feature creep. I think the lack of obvious new whiz-bang technology speaks somewhat to our success at keeping the feature-creep beast at bay. That still doesn’t answer the basic question: “If not the technology, then what is all the fuss about?” Can a new product offering like MultiBroker be both evolutionary and revolutionary at the same time?

The breakthrough is the network

Our situation reminds me of Sun Microsystems’ slogan: "The network is the computer." But in TT’s case, one might say: “The breakthrough is the network.” The strength of TT’s network, in terms of technology, physical distribution and especially business relationships, is what is making people sit up and take notice. TT is on the verge of taking the TT trading experience from end to end into a new environment that maximizes relationships for both buy-side and FCM participants. The combination of a broker-neutral solution, 100 percent direct-to-market order routing and a majority of the industry-leading brokers as day-one participants is a powerful one and, I believe, one that is unique to TT. Bringing a critical mass of end users into a growing and diverse pool increases choices and options for all, with benefits accruing to both sides of the fence.

One last point about technology: Just because we haven’t changed the game for now, that doesn’t mean we’re not actively cooking up the next steps. Real creativity starts with a sense of play, and that sense of play is alive and well at TT. It may be counterintuitive that the fastest route to solving hard problems often starts unintentionally with someone “just playing around.” It turns out that there are different ways to approach play that actually increase the likelihood of a creative result. John Cleese talks about the interaction between play and creativity in his lectures on the topic:

“This is the extraordinary thing about creativity: If you just keep your mind resting against the subject in a friendly but persistent way, sooner or later you will get a reward from your unconscious.”

So in spite of its familiarity, MultiBroker is breaking new ground for TT in many ways. We believe that the launch of MultiBroker puts TT on the threshold of even bigger things to come. And as for changing the game, we’re looking forward to a lot of work play ahead of us to make that happen.
The Next Round of Competition

This post about TT's new MultiBroker ASP solution by Jim Kharouf was originally published in today's John Lothian Newsletter. Jim is editor-in-chief of JLN.

Sometimes it is the small innovation or service that changes an industry.

Jim Kharouf, editor-in-chief
John Lothian Newsletter

Trading Technologies (TT) announced last week the launch of a new trading function that allows TT customers to choose which brokers they will route their orders through on its X_TRADER® platform. In other words, if you want to trade 100 crude oil futures, you can route 10 contracts through one broker, 50 to another and 30 to another and 10 to another, all from one trading screen.

This could be a game changer for the futures industry.

This technology is not groundbreaking, as other technology vendors already offer it, from Bloomberg to Realtick to Thethys and Trading Screen. But none of those firms have the futures footprint of TT. And in that sense, the new multi-broker solution could usher in a new era of competition among FCMs and choice for end-users. TT’s multi-broker functionality is in the beta testing stage, and also includes 11 banks, who have agreed to adopt the service including: BofA Merrill Lynch, Credit Suisse, Deutsche Bank, HSBC, J.P. Morgan, Jefferies, Macquarie Bank Limited, Mizuho Securities USA, Morgan Stanley, RBC Capital Markets and UBS.

Why would a broker ever want to be put on a system that could ultimately route order flow away from it? Because that broker believes it is better than the competition. So far, 11 FCMs think they have what it takes to not only keep existing customers but add new accounts as well.

When thinking about the impact of this concept, one example comes to mind. The airline and travel industry, has been massively challenged and changed with the introduction and spread of online travel booking sites such as Orbitz, Priceline, Travelocity and others. Customers have always had a choice of airline, but now individuals have more transparency on pricing and ability to pick the right trip for them. And customers have responded. Orbitz, launched in June 2001, was initially supported by five major airlines and drew 2 million visitors in its first month. Last year, the company said it handled more than 18 million per month.

TT’s solution just offers potential competition and convenience to its customers in a similar way. TT plans to expand that FCM list as the beta testing leads to a full launch planned for this summer.

The question is whether TT’s service will attract more FCMs, particularly Goldman Sachs and Newedge. The other issue is whether TT might take this service to another level - offering brokers a chance to display commissions, discounts or other services that might garner new customers to their platform.

It is a fine line to walk for TT, but the fact that it has created this service and found buy-in from both customers and the solid group of FCMs already is a sign a change in the industry may be brewing.

Jim Kharouf, Editor-In-Chief, John Lothian Newsletter