Trading Tech Talk

Live (to tape) at OIC 2016, Mark and Henry are joined by:

• Jesper Alfredsson, President Americas at Itiviti
• Karan Sood, Founder & CEO, Vest Financial

They 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 technology space
• What is Vest?
• Who is the Vest target consumer?
• Can users choose between custom portfolio overlays and pre-designed protection packages?
• Are these algorithmically generated or designed by humans behind 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 the CBOE, tell us about those.

Hot Topics in Tech: IEX asks for SEC exchange approval on merits of its application - IEX on Monday urged regulators to give the green light to its application to become a fully-fledged exchange outside of a broader debate that its plan has sparked about stock trading rules. CME calls time on New York open outcry options floor - The move follows the closure last year of its open outcry futures pits in Chicago and New York.

The Inbox: Listener questions and comments

• Question from JCrow - Refresh my memory. Why the heck can they not update OI more often than once a day? Is it a technical problem or something else?

Hot Topics in Tech: Today we are joined by guest co-host, Mark Melin from ValueWalk

• Vesel, LLC and Trade Alert, LLC join forces to provide specialized buy side listed options messaging - FinTech Companies will use customized alerting system to notify buy side clients of option trades mirroring their individual Watch List.
• Is IEX battle nearing end as rival exchanges adopt their technology? by Mark Melin - Recent movements by rival exchanges, buttressed by the very public outreach of some firms participating in the IEX debate, have raised the specter that the IEX Exchange could be gaining momentum.
• SEC to delay IEX stock exchange decision until June: reports - Another day, another delay for the upstart "Flash Boys" trading venue 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 first implementation of a securities exchange on Amazon web services cloud 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 Joseph Saluzzi - Is sponsored academic research a threat to our financial markets or an important innovation that benefits todays investors?

The Inbox: Listener questions and comments

• Question from Angeman - How is HFT impacting the futures markets? 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 voodoo
• The Janus margin engine, and real-time margin calculations
• Is real-time risk and margin a response to the new regulatory environment?
• Avoiding latency
• What is the engine driving the machine?
• OTC and the migration to listed options
• Fragmentation and the resulting complexities
• Janus risk management, market surveillance and compliance capacities
• How do they deal with fragmentated data
• Increased precision on timestamps, and the added complexities as a result
• Are 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. Featured article:

• 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?

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 market
• Going from phone calls to electronic trading
• What about spread trades
• And more

Hot 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?