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CTO Interview: Today we feature special guest co-host Peter Maragos, CEO, Dash Financial.
Catching up with Dash:
When Peter was last on Dash had just acquired the LiquidPoint business from Convergex with the help of private equity firm GTCR. Now they've just partnered with Flexpoint Ford, another PE firm. What was the impetus behind the second transaction? Dash has an impressive suite of diverse products and services - smart order routers and algos, the Dash360 analytics platform, trading workflow tools, an options ATS and even human traders. What are the upcoming projects/initiatives at Dash? Peter's views on crypto tradingHot Topics in Tech: Smart Routers
Today's topic was inspired by the following listener question: Question from See16: Can you please do a deep dive into smart routers on a future program? They are the secret sauce of the market these days but no one really seems to understand how they work. Shedding some light on the otherwise dark world of routing would be a great service. Smart Routing Deep Dive: Quite a few things happen after you hit the trade button in the options market - probably much more than most people realize. Your order has to get routed from your broker/execution platform to the exchange. But it's not a simple path. That's where smart routers come in. What is a smart router? What do they do? What makes them smart? What are the different rules/filters/configurations that most smart routers have to consider? - NBBO, exchange fees, size, exchange pricing model, PIP auctions, payment for order flow rates, etc. What about resting orders? Are the smart routers constantly monitoring them and rerouting if necessary? Why do we need them in the options market? How do options smart routers differ from equity smart routers? Why have smart routers become so controversial in the options market? Spreads: This is the Achilles heel for many "smart" routers since every exchange has its own spread book and they don't talk to each other. So you could easily work a spread order that lines up on one exchange but, because your order was routed to a different spread book, your trade isn't filled. How do we overcome the spread routing issue in 2018? Is it a tech problem or a regulatory problem? Final thoughts/takeaways on smart routers?The Inbox: Listener questions and comments
Question from Nikes T: Hey Options Insider! Love the network particularly the tech talk. We need more episodes! On an upcoming show do you think you guys could talk about why dark pools don't exist in the options market? Is it a tech limitation or something else? Question from LaLaLad: Does block chain have any practical use on the trading front or is it all just back office stuff? -
Mark is joined by co-host Matt Amberson, Principal at Option Research & Technology Services (ORATS).
CTO Interview: Our guest today is Michael Mescher, Founder of Gammon Capital.
He discusses:
What is Gammon Capital? You've talked a lot about the dangers of selling volatility and how short vol managers aren't worth their fees. What are your thoughts on the maelstrom of the past week? How have your funds fared over the past week? Machine learning is a hot buzzword these days, but what are some of the practical applications that you're seeing in the financial markets right now? Is it ready for prime time or still in the nascent phase? Unsupervised learning/ fundamental strategies? Supervised learning / quantitative strategies? Classification vs. Regression problems Hiring machine learning specialists vs. Products specialists 90% of the world's data was created in the past two years. Is that an opportunity or a terrifying statistic? Testing models on out-of-sample data vs. carefully constructed back tests? Should managers be concerned that the robots are coming to take their jobs and their clients?The Inbox: Listener questions and comments
Question from BLAL9 - What do you see as the outlook for AI and machine learning in the financial management space going forward? I see a lot of smoke but is there much fire? Are there many funds currently using it to generate alpha right now? Question from Tonc - What are the best ways to invest in blockchain right now? Question from Mark Kalis - How are comps getting the edge on us in trading? Is it just pure correlation trading? Comment from tDok3 - No debate to be had there. It's a simple & foregone conclusion. Higher fees ==> lower participation perhaps goal for CB market manipulation
In response to tweet: Are exchanges shooting themselves in the foot by continually hiking market data fees? Question from See16 - Can you please do a deep dive into smart routers on a future program? They are the secret sauce of the market these days, but no one really seems to understand how they work. Shedding some light on the otherwise dark world of routing would be a great service. -
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Today we have special guest co-host Rob Brogan from Flextrade.
Hot Topics in Tech: What's going on in fintech?
NYSE wins approval for 'speed bump' in trading Bloomberg is taking a shot at the New York Stock Exchange (again) Exchanges becoming tech firms Machine learning is transforming investment strategies for asset managers -
CTO Interview Featuring Jesper Alfredsson, President Americas at Itiviti.
He discusses:
What is Itiviti? The history of CameronTec Who is the target market? Finding the middle way for infrastructure expansion Don't spend time on the plumbing Recent upgrades, including smart order routing for options ordersHot Topics in Tech:
The tough new cybersecurity rules in New York Risk managers under pressure to cut down on post-crisis spending Hedge funds adopt novel methods to hunt down new tech talent -
CTO Interview with Jack Schwager: Author extraordinaire and now co-founder of Fund Seeder. Mr. Schwager is the author of Market Wizards, Hedge Fund Market Wizards, A Complete Guide to the Futures Markets: Fundamental Analysis, Trading Spreads and Options (and the second edition just hit store shelves!)
He discusses:
Was he surprised by the reaction to Market Wizards? How did that book come about? His new project in the trading tech space: FundSeeder What is FundSeeder? How does the funding process work? Do traders have to reveal their secret sauce in order to receive funding?Hot Topics in Tech: What is on our radar from a tech perspective?
Tech firm creates Trump monitor for stock markets. A London-based Fintech firm Trading.co.uk is launching an app that will generate trading alerts for shares based on comments made on social media by Donald Trump. Launching an open-outcry trading floor? How very 21st century.Box Options Exchange is building the first new trading floor in Chicago in decades - Boyle expects to attract traders who prefer open outcry for big orders and keep them with a more efficient 21st-century floor model. -
Hot Topics in Tech. Today we are featuring Alexander Lamb, Head of Business Development at The Technancial Company. Alex was previously a guest in March 2016. (You can access that episode here.)
Risk Management and AI: effective or ??? Its penetration into the business world has brought with it new services which aim to help automate and speed up a range of activities, including financial risk management. Wall Street next tech frontier is hacking into emotions of traders. Banks have already set up big-data teams to harvest insights from the terabytes of customer information they possess. Now they are looking inward to see whether they can improve operations and limit losses in their biggest cost center: employees. Tech is driving consolidation in the exchange space. CBOE Holdings Inc., agreed to acquire Bats Global Markets Inc. for about $3.2 billion to expand into stocks, ETFs and currencies trading. Exchanges defeat appeal of U.S. high-frequency trading lawsuits - A federal appeals court on Friday rejected an investor's attempt to revive lawsuits accusing major U.S. exchanges of selling early access to market data to high-frequency traders, the subject of Michael Lewis' 2014 best-seller "Flash Boys."The Inbox: In which the listeners take control
Question from Andrew Simmons: There is lots of acronym soup in trading tech. Two terms I have heard bandied about quite a bit are EMS and OMS. Can you explain these terms and maybe their similarities or differences? Question from JVigs: Are there any independent third party services I can use to analyze my margin and options buying power? This seems like a bit of a dark art these days in the options market. I do not really agree with the numbers generated by my broker and it would be nice to have some data in my corner. So much effort is devoted to trading in milliseconds but this important part of the market remains relatively untapped. Recommendations please. Great hit with Howard from StockTwits. Keep it up. -
CTO Interview: Today we are featuring Howard Lindzon, Founder of StockTwits, and Founder of Wallstrip.
He discusses:
Wallstrip and its flip to CBS The genesis and evolution of StockTwits Twitter pulling the rug out from under StockTwits How does StockTwits generate revenue? Stocktoberfest (Register today for Stocktoberfest)Hot Topics in Tech: IEX finally approved putting a 350 millisecond speed bump in place. Only two stocks will be available to trade on the opening day on Friday with another eight securities will start trading on IEX August 24 - August 29, IEX will begin listing a much wider universe, including all NYSE and Nasdaq-listed stocks. Renaissance Technologies hopes to use physics to battle Wall Street speed demons. Their plan involves algorithms, servers and the worlds most accurate timekeeper currently used for GPS satellites and deep space exploration, the atomic clock.
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CTO Interview: Today we are featuring Jason Pang, CEO of Sparkfin.
He discusses:
What is Sparkfin? What makes the Sparkfin Watchlist app unique? What was the genesis of this? Were the Sparkfin people just fed up with current watchlist offerings? Is the plan to remain a standalone service or to license the app to brokers as essentially a plug-and-play community module? Is it possible to execute through the app directly? Does Sparkfin offer curated lists as well? How does that work? Who curates them? What about paper trading / tracking? Can that be done through the app? Any plan to expand beyond stocks in the future?The Inbox: Listener questions and comments
Question from Alan Fromme - What is the future of market data? Will we ever see an era when the great monopolies are broken, and this data comes freely, or reasonably available to all? Question from NanFan - Caught you panel and the after show on your network. Great job particularly on the market data. I particularly enjoyed hearing the smaller firms perspective. It seems like market data is an endless black hole of costs for firms like that. Is there any hope for new firms in this space when it comes to pushing back on market data fees? Perhaps regulatory relief or a coalition of market data vendors that can push back against the exchange monopolies? -
CTO Interview: Today Mark and Henry are joined by Ryan Hansen, President of the new futures brokerage, Tradovate.
They discuss:
What is Tradovate? The benefits of multi-platform trading applications Membership pricing advantages Futures leading the way in tech Does the cost include payment for order flow? Will options ever be included on the platform? You can find out more at tradovate.com/trialHot Topics in Tech: What is happening in trading technology?
Silicon Valley to the rescue? The Long-Term Stock Exchange IEX: all they want is a speedbump Trading prompted by social media: CBOE S-Factors Petterfy looks at the future of the brokerage space -
Hot Topics in Tech: SEC says cyber security biggest risk to financial system. Fed should better safeguard economic data, internal watchdog says. A new trading floor in 2016? The options market turns to old tactic. CME upgrade soothes critics who viewed prior system as unfair. Nasdaq to unleash the machines on insider traders through Smarts investment. Why the SEC should just say "no" to IEX. Can a $24 Billion hedge fund blow the whistle? Citadel thinks so.
Blockchain Roundup: Inside the secret meeting where Wall Street tested digital cash. DTCC holds a blockchain conference. Microsoft Azure partners with R3 blockchain consortium. Red Hat announced the Open Shift Blockchain Initiative. CME Group bites on bitcoin, will now publish daily price.
The Inbox: Listener questions and comments
Question from Jane Neal: Does Trade Alert or Whats Trading off data on futures? Question from George Constopolis: Why is most stock and options settlement still T+3? Can we not get that down to a more reasonable time frame with the current technology? -
Live (to tape) at OIC 2016, Mark and Henry are joined by:
Jesper Alfredsson, President Americas at Itiviti Karan Sood, Founder & CEO, Vest FinancialThey discuss:
Is there one clear path that people should take for disseminating data? Hitting the pause button your portfolio API vs. UI The double-edged sword of flexibility Market data and the ensuing revenues Getting to the point of regulation on fees AI as it applies to the industry Wrecking the market through good intentions The proliferation of trading venues and the impact on business -
Hot Topics in Tech: Henry is a hot topic! At least, he presented hot topics at the OIC Conference. Growth lately has been in ETF and index options, with equity options lagging. So many new additions, from expirations to exchanges, have exploded the amount of data. More exchanges? If you build it, will they come? Updates on the institutional and market maker spaces. The illusion of price improvement. Auctions? The deathknell of the options market, or necessary evil? 3x growth in five years for products. Should this growth be trimmed? More trading floors. Physical floors. Indian patent act. Milestones in fintech, going back to the 1800's.
The Inbox: Listener questions and comments
Anthony J: Those new chip cards slow down the payment process to a crawl. Is there some fintech solution to make this better? ABC Markets: Which broker platform offers the best tech to its clients? I like IB and TOS -
CTO Interview: Today, Mark and Henry are joined by Karan Sood,CEO of Vest Financial. He discusses:
An overview of your background in the financial technologyspaceWhat is Vest?Who is the Vest target consumer?Can users choose between custom portfolio overlays andpre-designed protection packages?Are these algorithmically generated or designed by humansbehind the scenes?Does Vest charge commissions or is there an annual fee?How does this platform differ from TradeLegs?How did Vest become involved with the CBOE?Vest also launched some targeted “buffer indexes” with theCBOE, tell us about those.Hot Topics in Tech: IEX asks for SEC exchange approval on meritsof its application - IEX on Monday urged regulators to give thegreen light to its application to become a fully-fledged exchangeoutside of a broader debate that its plan has sparked about stocktrading rules. CME calls time on New York open outcry options floor- The move follows the closure last year of its open outcry futurespits in Chicago and New York.
The Inbox: Listener questions and comments
Question from JCrow - Refresh my memory. Why the heck can theynot update OI more often than once a day? Is it a technical problemor something else? -
Hot Topics in Tech: Today we are joined by guest co-host, MarkMelin from ValueWalk
Vesel, LLC and Trade Alert, LLC join forces to providespecialized buy side listed options messaging - FinTech Companieswill use customized alerting system to notify buy side clients ofoption trades mirroring their individual Watch List.Is IEX battle nearing end as rival exchanges adopt theirtechnology? by Mark Melin - Recent movements by rival exchanges,buttressed by the very public outreach of some firms participatingin the IEX debate, have raised the specter that the IEX Exchangecould be gaining momentum.SEC to delay IEX stock exchange decision until June: reports -Another day, another delay for the upstart "Flash Boys" tradingvenue that wants to be a stock exchange.As an exchange, IEX would not be fair, simple or transparent -Larry Tabb, Tabb Forum.The first exchange in the "cloud" - ISE announces firstimplementation of a securities exchange on Amazon web servicescloud computing environment.Inside the nondescript building where trillions trade each day- Equinixs NY4 data center in the Secaucus, New Jersey.High-speed trading remains risky, by Sal Arnuk and JosephSaluzzi - Is sponsored academic research a threat to our financialmarkets or an important innovation that benefits todaysinvestors?The Inbox: Listener questions and comments
Question from Angeman - How is HFT impacting the futuresmarkets? Is it as prevalent as in stocks? -
CTO Interview: Today we are joined by Paul Giedraitis, Principal at Neurensic.
They discuss:
An overview of Paul's background in the trading technology space?What is Neurensic?What sort of market manipulation can Neurensic's software detect? Spoofing? Layering? Other?It is bizarre that an old exploit like spoofing has become such a hot button topic in 2016.Hot Topics in Tech: What is going on in financial technology?
CFTC signals retreat over 'source code' repository.
The US futures regulator has signaled a willingness to back down on controversial proposals allowing it to freely access the source code of high-speed traders, following complaints that it could lead to sensitive intellectual property being revealed.SEC brings new charges over global press release hacking scheme.
The U.S. Securities and Exchange Commission has charged nine new defendants over what it has called a more than $100 million international scheme to hack into newswires that distribute corporate press releases and to use stolen information to conduct insider trading.Robots are reading trader chats to stop the next wave of bank fines.
Robots are automating yet another bank job: the task of sifting through traders’ messages to spot foul play, a process currently carried out by legions of human employees.Do not give away the store when enabling APIs.
Application programming interfaces, which have been available but in a limited manner, are used to let different software applications communicate and exchange data with each other. -
CTO Interview: In this segment, Mark and Henry are joined by Alexander Lamb, head of Business Development at the Technancial Company. They discuss:
Margin calculations, and the behind-the-scenes voodooThe Janus margin engine, and real-time margin calculationsIs real-time risk and margin a response to the new regulatory environment?Avoiding latencyWhat is the engine driving the machine?OTC and the migration to listed optionsFragmentation and the resulting complexitiesJanus risk management, market surveillance and compliance capacitiesHow do they deal with fragmentated dataIncreased precision on timestamps, and the added complexities as a resultAre there any inklings of systemic risk on the horizon?The Inbox: Listener questions and comments
CFTC and SEC can't handle the new era of trading. What about a new cyber-regulator?Are the exchanges to blame for the rise of HFT? -
Trading Tech Talk 47: Blowing the Whistle on HFT
CTO Interview: Today we are joined by Haim Bodek, Managing Principal of Decimus Capital Markets, LLC. Haim founded Trading Machines and is featured in the book Dark Pools.
Vice - What led whistle-blower Haim Bodek to expose the biggest scam on Wall Street?He has said Flash Boys misses the mark, what did he mean by that?What are his thoughts on IEX? What changes do we need to do to make REG NMS more effective?
Featured article:Hot Topics: What is buzzing
Tired of boogeymen portrayals, speed traders take to NYSE floor - Automated traders have an image problem. What better way to address it than to set up shop in one of the most iconic spots in global finance: the floor of the New York Stock Exchange. Citadel Securities and Global Trading Systems LLC recently agreed to buy NYSE floor-trading businesses.
How prevalent and profitable are latency arbitrage opportunities on U.S. stock exchanges? This paper provides evidence that high-frequency traders have numerous opportunities to realize profits from latency arbitrage.CFTC signals retreat over "source code" repository The US futures regulator has signaled a willingness to back down on controversial proposals allowing it to freely access the source code of high-speed traders, following complaints that it could lead to sensitive intellectual property being revealed. -
Hot Topics in Tech: CFTC too broke to properly police flash traders, Massad says -The top U.S. derivatives regulator said his agency needs more money to keep up with the Flash Boys. Cattlemen vs CME - Round 2. Cattlemen asked for numerous changes. IEX battle heats up - Citadel has been one of the most vehement objectors to IEX, and has filed three public letters and held three meetings with SEC officials to lobby against the application. Aquis Exchange to ban predatory high-speed trading - A start-up European share trading venue is aiming to reboot its fortunes by banning aggressive high-speed trading from its platform. High-frequency trader warns of potential market "catastrophe" - The head of one of the biggest high-frequency trading companies has warned that there are several faultlines in the structure of increasingly electronic, automated financial markets that could lead to a “catastrophe” in the long run.
Blockchain Update: IBM Director declares 'We’re all in on Blockchain" - John Wolpert gave a keynote speech covering the deficiencies in the approaches being taken by today’s blockchain developers and why he believes a more collaborative approach is needed to bring the tech to market. Bitcoin outage - NADEX detailed a halt in trading of its daily and weekly bitcoin binary contracts, based on the so called unavailability of the price index that underlies the contracts.
The Inbox: Listener questions and comments
Comment from Tom, Henderson, NV - I live on the cusp of civilization out here, so I have no choice but to take a more position oriented view on trading. I am not saying that I want to be a market maker of HFT but how funny is it that today your location (or more appropriately your connectivity) dictates your trading style? Seems somewhat backwards to me.Question from N Filasco - I am over Blockchain. What is the next thing? -
CTO Interview: Today we are joined by Eric Scharf, Director of Marketing, EOX Live.
They discuss:
What is EOX Live?The evolution of the nat gas marketGoing from phone calls to electronic tradingWhat about spread tradesAnd moreHot Topics in Tech: Cattlemen vs. the CME. IEX exchange quest spurs a "Flash Boys" fight with Citadel. Blockchain update: Security concerns, more money for startups and question from clearing firms.
The Inbox: Listener questions and comments
Question from Allanon - You discussed trading via smartphone in the previous episode. I think the real revolution will be trading via virtual reality. Can you imagine standing inside a swirling sea of quotes and literally picking you trades out of the air? Forget the GUI. It will all be about virtual user experience.Question from JVicks - What is the next market that will fall victim to predatory HFT? -
Hot Topics in Tech: The worst start to the year since forever. Unfavorable light shining on China, raising the debate on circuit breakers. NASDAQ uses blockchains in the first large-scale trade, or so they say. Symbiont disagrees. Will blockchains be the HFT of 2016? The tech opportunities created by the regulatory environment. What have SEFs done to the world of swaps?
The Inbox: Listener questions and comments
Comment from Jim B. - Will there be TTT awards for the best and worst developments of 2015?Question from George S. - How far are we away from being able to be a professional prop trader from a beach in Tahiti? When can we do all of this from our smartphones?Question from Big Bob - Is there open source software in the finance industry?Question from Sarah R. - Can you explain what a matching engine is and how it works?Question from Leo10 - Who was your favorite guest from 2015?Question from Jim B. - What is the optimal tech set up for the aspiring active retail trader? - もっと表示する
