Welcome to Electronic Edge. Iâ€™ll be discussing/analyzing/reviewing different aspects and issues facing the electronic trading environment.Â My hope is that this will be informational and educational. While the vast majority of all trading is done electronically, there are still some in the industry that have not yet made the switch to â€śscreen trading.â€ť Thatâ€™s ok. Hopefully, this forum will allow them to learn how trading electronically can enhance their business.
For a new entrant to electronic trading, or someone hesitant, it can seem like there is a new language being spoken. LAN, WAN, router, iLink, Session ID, FIX, 100M, 1G, 10G, data center, algo trading, HFT, circuit and a myriad of other terms can cause many to quit before they ever get started. Then thereâ€™s the aspect of dealing with various exchanges, meeting everyoneâ€™s requirements and ensuring both internal compliance and the exchangeâ€™s compliance offices are happy. Or at least as happy as compliance offices get.
However, as daunting as it can be, electronic execution can increase the opportunities for traders. The ability to trade multiple products on multiple exchanges from one screen allows for an exponential increase in the ability to trade. When algorithms are included (whether for high frequency trading, or other purely for number crunching), the possibilities become endless.Â Simply put, an algorithmic trade allows a computer program to analyze a variety of inputs and execute a trade. The algorithm can be as simple or complex as the trading team devise, using as many or as few variables as they like. Execution can occur on any exchange that the system has access to, or trades can incorporate strategies across exchanges.
Data centers are facilities that are designed for computer equipment. In our industry, they generally have high capacity access to exchanges, differentiating them from data centers that Google may have in rural areas. There are also a variety of options for bringing connections in to the data centers; with a server hosted in a prime facility, youâ€™ll still need access to it from outside.Â There are many data centers catering to the financial industry throughout the world, and the leading providers are all fairly well known â€“ Equinix, Telx, Savvis among them. Additionally, some exchanges are starting to get involved in having proximity hosting as one of their offerings. Both NYSE/LIFFE and the CME Group have recently gone â€śonlineâ€ť with their own facilities near their older facilities where they were colocated within a providers facility.
My expectation is to be able to educate and enlighten more as I continue to write here every other week.
- Allyn Okun, Born Capital
Allyn is VP, Customer Relationships with Born Capital. He focuses on the customer experience throughout the customer life cycle.
Born Capital provides unparalleled technology services to banks, institutions, hedge funds and asset managers. Â We service our clients through technical installations in North America, South America, and Europe.