Hack the market

This week we spent a few hours at the tradetech conference to see what people in the industry are up to and see some demos. Their “certified” logo inevitably reminded me of an old colleague who would from time to time mimic an old saturday night live skit. We saw some interesting things and, most importantly, found that our creative niche remains our own.

The booths we checked out included a few of the big sell-side firms shilling their creatively-named execution quality algos and their white-labeled oms/ems offerings. They had, by far, the best shwag (I should thank Merrill for their nice umbrella and commend citi for the very knowledgeable lady at their booth) but their algo offerings weren’t very interesting to me as they aren’t of the alpha-seeking variety.

My favorite exhibit from an innovation perspective was actually a hardware offering from a firm named tervela which makes, essentially, a complex-event-processing (CEP) engine implemented in hardware. Very cool. I can’t imagine why any big shop would use any other sort of CEP solution. I had heard of them before as a guy I knew had joined them before their product had been delivered, so they were already on my radar, but seeing the hardware running was a big next step. Given the nature of their offering, it actually seems to me to have a bigger market in military than trading applications, but in both spaces it looks pretty compelling.

We looked at a few of the ems/algorithmic trading vendors and they didn’t offer any surprises but still had points of interest for us. The three systems we looked at were portware, tethys, and flextrade, and they can all credit themselves with knowledgeable, engaging and enthusiastic presenters in their respective booths. The platforms each had their own personalities and strengths. Portware had a very pleasant looking user interface and was, to me, most intuitively laid-out. The tethys platform seemed to have a real affinity for options and had sophisticated analytics to support that inclination. And flextrade just seemed like the most solid and mature of the platforms, but it’s hard to know such things from a trade show drive-by.

I was very interested to see that each platform offered user-interface level programmability via scripting of the sort I’d spoken of here but with a big difference. Instead of providing a scripting language, portware and flextrade offer users the ability to bring up an editor and add columns to tables via the platform’s native programming language – java and c++ respectively. Whew – can you imagine your average end-user whipping out some c++ to add a column. Mutant super users, maybe!

Overall we were very impressed by these trading systems. In particular we were happy to note that their strengths aren’t ours. If you want to use, say, lehman’s super-ginsu execution strategy (I’m making up that name), all of the platforms have the order available as a custom FIX order type which you can easily select from a pull-down menu. So their integration with a multitude of sell-side execution-quality algorithms is very complete and seems well-done. But their offerings are very limited compared to our own when it comes to the development and analysis of alpha-seeking strategies. They’re really not even close and it seems clear that their emphasis on the resource-intensive efforts of connectivity and broker integration has allowed us to create the class-leading platform for alpha-seeking strategy development.

So it was good to see the state of the industry and it was especially good to see our niche persisting at trade tech.

FIX Protocol, events, startup, technology