The Derivative - Tackling Trading Technologies and (lower case t) technology with Guy Scott of TT

Episode Date: May 7, 2020

Futures traders take clicking a price to generate an order on their PCs for granted these days, much less the instant delivery of every tick, order book data, and trade fills. How’s it all work?  How did it all used to work? In this episode we talk with Guy Scott of Trading Technologies about the early days of screen trading to the evolution of modern electronic trading, to what it takes to power the trading of hedge funds, trade desks, big banks, and the little guys, We’re covering professional volleyball, the early days of screen trading, trading volumes, the original order book view on trading screens, the evolution of electronic exchanges, Scottish rugby, optimal screen layouts, managing human error, the English countryside, international expansion, surveillance technology (the good kind!), and the future of Trading Technologies (the company) and trading technologies (the tech). Follow along with Guy Scott on LinkedIn, follow Trading Technologies on LinkedIn, Facebook and Twitter, and check out their website for more info. Show note highlights: Karch Kiraly & Marble Racing And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, or LinkedIn, and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Thanks for listening to The Derivative. Please note that due to COVID-19, we are recording The Derivative podcast remotely. We apologize in advance for the possibility of lower quality audio, but hope that you can enjoy our content just the same. Thank you. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or company's features. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past or potential profits, and listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of

substantial losses. As such, they are not suitable for all investors. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. It's one global trading environment. It's co-located at most of the major exchanges, so we can offer low latency trading access. Then we leverage cloud technology to make non latency sensitive data always available for the trading applications. Historically if you were running client server products in different data centers trying to store vast amounts of data and making it available

to every user globally was a real challenge. You can be anywhere in the world and log in by the internet and our application knows who you are, what your workspaces look like, what your preferences are, your audit trail loads up, everything that you would expect. We get used to that with apps now, but in the trading world that's still not that prevalent and we've made a lot of progress. Okay, welcome back to The Derivative by RCM Alternatives. I'm your host, Jeff Malek,

and today we're stepping into the world of software that powers how hedge funds and big trade desks and commercials and banks and more actually get trades from their shops to the exchanges and back again. And we have just the guy for that, Guy Scott of Trading Technologies or TT as it's known more casually in the investment space. See what I did there, Guy? That was nice, Jeff. Nice. Thank you. I like that. So TT creates professional trading software, infrastructure, and data solutions for a wide variety of users, including proprietary traders, brokers, money managers, CTAs, hedge funds, commercial hedgers, and risk managers.

I think I left one out of there, which is Algo solution providers, like our own Algo team at RCMX, who also interacts with TT and their software on a daily basis. So without further ado, let's dig into how this all works. Welcome, Guy. Thank you, Jeff. Thanks for having me. No worries. And so we're in the time of Corona lockdown here.

So you working from home or what's your current situation? Yeah, we moved. We've got a work from home policy in place for people regularly. It actually wasn't that disruptive. Of course, it's not easy to do business in this environment, but we're relatively comfortable working from home and all our internal systems are easily accessible remotely. So we're more fortunate that some of our clients who seem to be running around trying to scramble and figure out how to get trade desks access to all their software and applications. Yeah, I'm sure. And you're here in Chicago with me, right?

Yeah. I'm actually out in Naperville. Yeah. Out in Naperville. I'm here in Roscoe Village. So we're pretty okay. Yeah. So you're an average sports guy here. You used to have played rugby. I played, well, I played volleyball, actually. I was a huge soccer rugby fan at high school. I ended up playing volleyball and ended up playing professionally, which dictated my start in life a little bit because I was playing volleyball through college and when I first started working. But I'm a huge fan of all sports, and I love soccer and rugby especially

and travel around trying to watch rugby when I can. Get the All Blacks. They've come here to Soldier Field a couple of times. I was at the famous game when Ireland beat them. Yeah, that was a huge game. Yeah. Wow. Did you go?

I didn't. I remember it happening and desired to go but didn't go. Sounds like the All Blacks were probably out the night before enjoying some of Chicago and didn't bring their A game. Well, the Irish don't want to hear that, but that may well be true, yeah. But anyway, it was a big event, and international rugby is one of my passions. It was nice that Chicago got to host such a big game. Yeah, yeah.

And so professional volleyball, what did that look like? Where was that? That was back in England when I was through college. I played for England in the 20s and then the national team for about four years until I was 26, 27. And because I was doing that, I was studying a sports science degree and sort of migrated into teaching. So I was a PE teacher and geography teacher for two years out of college, which actually not many people know about. We don't really talk about the volleyball in my teaching career very much, but that's how I started after college. You're talking to quants and whatnot mostly, so they might not understand it.

No. What was that famous U.S. volleyball guy, Karch Karai? Was that his name? Karch Karai, yeah. I actually played against him at the World Student Games in Edmonton in Canada, and I guess you could Google it. It's 1983, and I think I was 18 years old. And he was a little older. But the US team was there. He was playing for them.

We'll put that in the show notes. I think they won a couple of gold medals, right? Yeah, they were pretty good. They beat us 3-0. But it was fun. We had a good time. Did you ever get to the Olympics? No, because we weren't top 20 or top 18. They only take about the top 18 teams to the Olympics. So you go through a couple of rounds of qualifying and we were never good enough but i played european championships and other competitions around europe and it was fun for a while until you want to go off and do other things exactly our first professional volleyball on the pod so congrats on that so you lead volleyball you're doing uh so is that what a human movement studies is it's

basically a phys ed degree yeah exactly half sports science and half um sociology and psychology of sports as well and and then you move into either the sports industry or you move into education and i did an extra year postgraduate certificate in education then i moved into teaching you missed it missed the sports industry could have been a famous agent or something yeah maybe yeah moments of truth these decisions you make throughout your life exactly so how did all that work from the uh human movement studies to getting into trading technology in the investment world yeah um so i was my one of my volleyball coaches worked at an advertising agency well he ran an advertising

agency and i thought i wanted to move into advertising so while i was teaching i'd already decided that wasn't going to be my career for life and i thought well i want to get in advertising so they suggested i'd get a one year's experience in selling so I got a job selling photocopies for Konica and I was pretty good at it so I ended up staying longer than a year I stayed a few years and ended up running a sales team in London and then but obviously that's nothing to do with the finance market so getting into finance was again through connections I had a friend working at Tullitz and he suggested I take a look at market data and charting providers because it was a growing industry and kind of niche like and more interesting so I and he suggested I take a look at market data and charting providers because it was a growing industry and kind of niche-like and more interesting. And he actually was using Nitrider, if you ever remember that name.

I can't remember what else he was using. An early version of TradeStation. And they didn't have any opportunities, but through a recruitment agency, I ended up joining FutureSource as a salesperson. And that was in 1994. And I was selling the FutureSource chart in terminals and data feeds for TradeStation, the early form of TradeStation, before they had any trading when it was truly a quotes, chats, analytics platform.

It was an interesting time, though. They had an FM signal from a high tower in London, so you could stick a receiving box on someone's desk and they'd get real-time quotes, which somewhat unique and they famously sorry go ahead sorry go ahead no they also famously had a marketing campaign before i joined called quotes from space and they had this big satellite dish and then a satellite sending quotes down so it was they were the first provider in europe to have live market data via satellite. The only problem was the satellite dish was about five, six foot across.

So it was a bit of a challenge getting clients to install it. It was probably the biggest hurdle we had to bring in our new customers. And what was that? I'm sure there was still some lag between what was actually happening, right? Because you're getting like Chicago Work Exchange. Yeah. Well, remember you had someone reporting prices in the pit. Yeah.

Yeah. And then it would go out to a ticker plant. Then it would be piped out via satellite. So yeah, you call it real time, but it really wasn't what we'd consider real time today. Right. It was real time to anyone in that area you were in was the fastest possible in that area. But compared to being in the pit, you were still second at best. Precisely. That's crazy. We used to use TradeStation way back then for that thing of just the software, running a bunch of programs for different clients. Yeah.

It was a great product to sell. Every time we showed it to someone, I had some pre-configured indicators, you know, moving average of an RSI or something. And someone would say, wow, it's amazing. And then you go back two weeks, two months later and ask them what they're using. And they were basically using it as a standard charting product because it was probably one of the best you could use. But it was a really interesting product at the time, way ahead of its time.

And so they basically said, hey, if you can sell these copiers, you can help us sell these futures data services. Yeah, and I learned technical analysis and the market data world and futures trading as quickly as I could. And it was a successful time. I was with FutureSource for 10 years, and I moved to Chicago with them in 2002, right after 9-11. And then a couple of years later, we sold FutureSource to IDC Group. Yeah, I was going to say whatever happened to FutureSource. Yeah, so it was sold to IDC who subsequently, I don't know if they sold it or became absorbed

into the ICE data services. So FutureSource as a product still exists within ICE data services, I believe. Okay. But I left when we sold the company, and I knew a couple of people at TT, and they were looking for someone to run the Chicago sales office. So I moved right at that time.

But I left when we sold the company, and I knew a couple of people at TT, and they were looking for someone to run the Chicago sales office. So I moved right at that time and joined TT in 2004. And moved from where you'd been in London area? No, I'd already moved to Chicago in 2002. So I'd been in Chicago for a couple of years and then moved to TT in Chicago. And I skipped over, what's your accent? Pure English or some Scottish in there?

Yeah, it always confuses people because I'm English, but I don't sound English because I'm not from London. And I'm actually from the Lake District. So I was born close to Scotland, about 12 miles from the border. But I'm definitely English, not Scottish, even though my last name's Scott. And I think the Scots go back to the lowlands of Scotland. So at some point, I guess I was Scottish, but that's a very long time ago. Got it.

So let's get into TT as a company a little bit here now. And tell me about the company history, when it started, its growth over the years. Sure. Yeah. So the company was founded in 1994, which is a long time ago when you think about electronic trading and where the future industry was then. Yeah, it doesn't seem possible, does it? Right, so there was two guys working for DTB, Deutsche Terminbos,

working on their green screen trading application and helping them enhance it and improve it. And they determined that they could probably do a better job than they'd done, so they built a competitor to it. And that was the early version of it. What was the green screen? I'm not with that i'm not like the movies yeah so um it literally was green with white letters on it or black letters i mean it was not even full color and that was the dtb or the predecessor to eurox that was their own exchange screen and it was an electronic trading

screen for for uh for german government bonds and other products. But it wasn't particularly successful. So like the old DOS screen, basically, with the green and white text. Exactly. So, yeah, so last year we celebrated our 25th anniversary as a company. And a lot's changed, obviously, from there to now. And so surely in 94, so sorry, I cut you off on that story. So the guys were looking at the green screen saying we can do a better job. Yeah, so they built the TT screen and it actually looked a lot like you would expect today.

I mean, certain things changed and the MDTrader came a little later and other functionality, obviously. But some of the colors were there and the look and feel was along the lines of what XTrader had for a long time. But the company changed. We've grown from two people to 250, 350. 350 employees, 250 in Chicago. We're in 14 global offices now, and obviously the company's grown successfully over that time. And a lot of the companies that were around at the time have not since disappeared, but I think TT is one successfully over that time. And a lot of the companies around at the time

have not since disappeared, but I think TT is one that survived the time. You can tell, and hopefully don't take this the wrong way, but you can tell with the name, right? Trading Technologies, that it's old school. If it was launched today, it'd be called something like Mango

or some one word name. I'm sure you're right. I'm sure you're right. It would be something more cool. And sometimes we struggle with that title, Trading Technologies technologies because actually it does define what we do but sometimes it paints us in a corner as well because we've expanded out a little beyond the trading screen now right needs to be trading technologies and software and other things and other things yeah exactly so yeah what'd you countries? Yeah, 14 global offices in all the major locations.

Standard, Americas. Yeah, so we opened – so in the U.S., obviously, New York and Chicago, we opened Houston when IMEX went electronic. We're the only real vendor that did that, I think. We still have a really strong user base in Houston and across the energy trading firms globally. We opened a Brazil office in Sao Paulo in 2010, and that's grown really successfully. Again, not that many U.S. vendors have a local presence there.

We're in London and Geneva in Europe and the major centers across Asia, places you would expect, Sydney, Hong Kong, Singapore, Tokyo. And so touch on, you mentioned the other things that are happening. Touch on some of those real quick in terms of your current products and services. Yeah. So, well, I think anyone who knows TT or knows anything about it just probably knows we're in the middle of a migration from the legacy XTrader platform to the TT platform, as we call it. It's a really innovative name, but we felt like everyone called XTrader TT. XTrader is the trading screen, and everyone called it TT, so we called the platform TT. And we're probably 55%, 60% migrated now, but that's

consuming a lot of our time and energy as we try to... And that's essentially going from desktop to server-based? Well, XTrader was a client-server application, but historically every broker or bank had their own installed version of it, either run by their own IT staff or managed by us. And there's inherent limitations with that, not just the technology itself, but the whole design of that. So what we've done with the TT platform is move to a software as a service platform,

one global code base managed by TT. It's a broker neutral platform. So every single broker or bank that's a client is on the platform and all of our buy side clients and connected to the same platform, obviously. So it's one global trading environment. It's co-located at most of the major exchanges, so we can offer low-latency trading access. But then we leverage cloud technology to make non-latency sensitive data

always available for the trading applications. Historically, if you were running client server products in different data centers trying to store vast amounts of data and making it available to every user globally was a real challenge but the cloud yeah but now you can you can be anywhere in the world and log in via the internet and our application knows who you are what your workspaces look like, what your preferences are, your audit trail loads up, everything that you would expect. We get used to that with apps now, but in the trading world, that's still not that prevalent. And we've made a lot of progress.

And so it seems like this lockdown and people working from home would kind of push that further along. Yeah, actually, it's funny. We have a management call every monday afternoon and i was saying a week ago um the feedback from the sales people was a lot more um leads coming in from professional traders um high net worth individuals that may have been using other applications but i think they we call it the flight to quality but i think they wanted access to high performance software but they want access to it wherever they are in the world at the moment maybe they're locked out locked down in some remote location.

As long as you've got internet access, you can have world-class software. And so we've actually been adding, believe it or not, adding quite a lot of clients over the last few weeks as they try to get the best access they can. And obviously the volatility as well. That's when you want the best products, is when there's more volatility and more volume. And so just so people who don't know you guys can get a sense of your standing in the industry,

what sort of market share, a number of contracts are going through there daily, or what kind of stats like that can you give us? Yeah. I mean, it's tough. We don't even know really. I mean, obviously, it's difficult to determine exactly. I would say that if you look at some of the, I wouldn't say smaller, some of the regional exchanges, we have pretty high market share by volume because we just have some of the large participants. If you look at CME, it's a diverse user base. And as you know, a lot of the high frequency firms dominate the volume numbers. So if you're actually looking at volume, then obviously we don't look like we've got a huge percentage of the volume at CME.

Right. I guess it would be unfair just based on volume, but in terms of people doing the trading on the screen versus just sending them in. Yeah. So I think if you could look at it by participants. So the top 20 Wall Street banks or the top 20 FCMs are all customers. Some of them use us extensively throughout their own trading floors and on their brokerage desks. And so in that sense, we've got some really high volume users and they do contribute to the major exchange volume. I think eight of the top US energy firms and maybe even nine of the top global oil and gas trading firms are our clients. So in the commodity space, especially on energy, we're somewhat dominant. And there's less access to different platforms for those markets as well.

If you're not trading on the exchange screens, there's a high probability using TT. And we have six of the top 20 global hedge funds as well. So again, they may not contribute by volume, but as far as the business is concerned, the banks and brokers value the TT distribution because we provide access to some of the top firms. And then our history started with proprietary trading groups. And we still have, I don't know, I think the number was 19 of the top 40 someone gave me a few weeks ago. And that's surprising when you think about it, because a lot of those have migrated into high frequency trading firms. But they still even some of the household names that you might associate with high frequency trading use our software somewhere within the company because they don't need to build and support their own applications for every single market.

Or they might have traders who just can use TT and it's in an optimal, and there's no point building tools themselves to do what we can already do. And so what kind of a number of contracts are going through the platforms, pipes every day? Well, annually it's in the billions. I can't really quote your numbers, but I can tell you that it's up 40% this year. Wow.

Because it's really the last especially march has been easily our record volume month and that last august was pretty high but this has been much higher and it seems to me from the outside looking in like you must have the infrastructure almost on par with the exchanges to be able to process all that yeah we have a global network of fully redundant connectivity very high bandwidth market data consumes the volume on the bandwidth globally and on our network not the trading volume because obviously compared to the market data volume it's pretty small market data volume has been huge over the last few weeks but the platform's held up well and we've got we we know um we always know what our volume of market day is likely to look like

if it bursts and so the platform's really built to manage that type of activity talk about that for a second so that the market data by definition is many times the trade because you'll have many bids and offers for one trade right correctly yeah if you actually think about any normal traders activity um there's a lot of changes in market data that they're receiving versus how many orders they're sending and so that's the messaging on the platform and i think people often look at trade volume as an indication of what's happening but it's really the entire messaging volume that you need to accommodate and don't the exchanges now charge by messaging volume in some circumstances instead of by trade um well not with us i think they certainly have controls with their customers around

um percentage of orders to changes so that the messaging doesn't get out of hand and they have and they'll they'll find participants if their messaging exceeds a certain percentage of their orders. Yeah, a better way to put it. Not charging, but the messaging volume is way more top of mind than it was five, 10 years ago. Yeah, exactly. All right. Thanks for joining us. Today, we're talking everything screen trading with Guy Scott of TT. So Guy, let's get into the history of so-called screen trading or online trading platforms and the transition into our current landscape. What can you tell us about, quote unquote, screen trading? Yeah. So I actually have an interesting perspective on this because I was working for FutureSource in London and selling market data terminals. And I got a call from a guy working

for David Kite. I don't know if you know who David Kite is, but at the time he was a board member of the Life Exchange. And he was probably the largest local. He was certainly the largest local in the bond pit. And at that time, the German government bond, the 10-year bond, was traded almost exclusively on the floor in the life exchange in London, which the Germans weren't so happy about, obviously. But life was dominant as the European exchange. And what happened was Deutsche Terminbosch, DTB, which later became Eurex, which later was absorbed to within Deutsche Bourse, the entire German exchange group.

They had their own exchange screen, but it didn't have much penetration. It wasn't particularly successful. They launched and marketed and tried to enhance it and they listed they they enhanced their distribution in London and they had the 10 year government bond on the DTB trading electronic trading platform screen when I got the call from David Kites one of his guys I went down there in the afternoon and they had an office across the road from Cannon Street where the life exchange was based and it taken a whole floor in this office building and there was guys in there putting desks together. There was a pile of monitors in boxes in the corner.

And David Kite came over, and he basically said, look, I want 40 future source screens. Can you get me a quote? And I was like, yeah, sure. No problem. He's like, yep. And then so they started to tell me what they were doing. He said, this is going to be, they're going to have pad systems,

which was one of the original ISV screens. They're going to have a charting screen, so that can be you or somebody else. Make sure you get me a good price. And we're going to have guys set up here to trade from screens. And so I started to understand what they were doing. Within a few weeks, that room was full of locals from the floor and the life exchange that walked across the street, Cannon Street, gone into David Kite's office and started trading from the desk because the volume was moving away from the floor and onto the screen.

Were they arbing it or completely trading at electronic? So at the time, I think they were trying to do both. I think they were going to the floor and then maybe they had a body upstairs. So there was definitely that happening. And we know that was happening later, trying to add products between London and Chicago as well. So you'd have someone on the phone thinking that Chicago products were going to react from whatever was happening in Europe on the screen or vice versa. A headphone guy we know had a story about those first terminals.

And I think there was something with the key would only process so many bits per minute or something so they'd try and trade and they couldn't trade it fast enough they couldn't hit the key fast enough right so they hooked up a calculator they like hardwired some calculator into the terminal if they hit the right button on the calculator it could send four bits per second versus one bit per second so they were doing trades four times faster with the uh calculator than calculator than the platform. That's a great story. I had not heard that. We had a lot of clients who used the APIs on the XTrader to connect to video gaming

terminals because they thought that they could move around. They could basically just trade quicker rather than have to type on a keyboard and use a mouse. So a few guys did that as well, similar concept, I guess. Anyway, what actually happened was all of that volume moved through 1997 and into 1998. By the end of 1997, all of the bund's volume had moved. I think the Life Exchange had plans to move to Spitalfields Market

and take a much bigger presence, expand the floors and everything, and they just cut all their plans, changed everything after that. Everything changed. And this is the predecessor of Eurex, basically, right? Yes, yeah. So then what happened? DTB, Deutsche Terminbosch. And so they weren't just launching an electronic contract.

It was only electronic exchange, right? Yeah, I think they'd had a flaw at some point in Frankfurt, but all the volume was on their screen. They just decided that's what they were going to do. And of course, Life then had to react and respond. So they started to build what became the Life Connect platform. Or maybe it was called something else previous to that. But anyway, their own access.

And Life is London International international futures or something exchange yep london international financial futures exchange yeah two f's two um yeah yeah took took them two years to build their own electronic trading platform and launch it alongside the products on the life floor. And that's when ISVs, independent software vendors, really were born. And there was a whole list of them. That's a way of saying, hey, we can get in there quicker than two years? Or they were... Well, they were already right into Eurex. But think about it.

You could get a screen from Eurex DTB for free, much like some of the exchanges today. Or you could go and buy something better. But if it was only access to one market and they were only trading those one or two products, the ISVs really didn't have that much appeal. But imagine Life then saying, oh, we're going to launch an electronic platform as well. And they decided that rather than produce their own exchange screen, they'd make it available, access available via an API. So now you could connect to Life and DTB with one screen and see products side by side. Amazing.

Think about that. So at that time, that was the big change. That was when the electronic marketing commodities really – What year is it? 99, 98, 99. I'm a little vague on that. I'm pretty sure it was 99 when Life launched their API. And so, but Trading Technologies was already going by then.

Yeah, actually, another interesting twist in these things, things always come around. So while I was working at FutureSource, I think it would have been around the time in 97, a couple of guys showed up in our office and camped out in one of our meeting rooms. And I asked my CEO, who are these guys? I didn't know who they were. They were like sleeping there just yeah no they were working and they um

they uh they were two guys from tt trading technologies this company i'd never heard of and i said what do they do he said oh they're a trading platform they they connect to dtb and they're setting up a business here and i know them so I said they could use one of our meeting rooms while they get their office space figured out so that they were there for about two weeks fast forward you know another 10 years or whatever it is and I was working for them but that was the two first employees in London and so fill in the blank there for me so they started in 94 but there wasn't effective screen trading until 99 you're saying yeah that's really when it took off because you could trade live from DTB on one platform.

So what was the original TT screen trading? DTB. DTB, all right. So it was basically just a front end for that junky DTB platform. Yeah, yeah. No offense to our DTB listeners. To the green screen. Yeah, exactly.

That's right. That's what it was. But you know, there were so many firms around that time i was trying to remember the names there was i think cross fryer yes trader fast fill pat system or easy screen futures dynamics uh echo trade royal blue they became fedessa knife fix gl tradeTS, they were all formed around that time because there was a requirement for a trading application to access more than one market. And of course, as other exchanges moved electronic, all these businesses changed, moved to Chicago, opened their offices in Chicago.

TT was already there because weirdly it was a Chicago company doing business in London. And it gets confusing too because there was quote unquote online trading. I remember doing it myself back in like 96, 97. Yeah. So I was trading. I came off the bond pit, was a clerk paper trading on my cards there, thought I could make a gazillion dollars, opened up my $10,000 trading account and quickly plowed through

that. But I was doing quote unquote online trading, but basically you were just placing the orders online. They print out in the printer on the floor and they get executed on the trading floor. What you're talking about on the screen in those days was an actual platform connecting to an electronic exchange. Yes, exactly. Yeah, exactly.

And that competed directly with the guys in the pit, right? So they would be both matching trades simultaneously. But as we all know, electronic matching engines eventually win out, unless it's some esoteric trade. When Globex finally launches and e-mini comes out, what year was all that? Yeah. Not to put you on the spot. Yeah, i'm a little vague on that actually so but if you but what happened was as you probably remember they that they had um an old matching engine at cbot on all products and they um they would trade

out of hours i forgot the name and then and then they purchased LifeConnect as a platform and moved the life matching engine over. And the CBOT had a life matching engine. So they replicated the life exchange technology. CME built Globex. And I can't remember the origin of that, quite frankly. We'll look it up. And they started trading hours. Yeah.

You just sparked a question. Was TT ever thinking of getting into that game of like hey why don't we build an exchange engine for them it's funny you ask that because we always used to get asked that well if tt became an exchange you know you could own the world and i think our philosophy was always that we wanted to be a good technology partner for the industry and that wouldn't have served the participants in the best way. You know, the exchanges had been around for a long time. They were very good at what they did.

There was a lot more to the market technology than matching trades, and it didn't make sense to try and become an exchange. We just wanted to be the best we could be at what we were doing and be a key component of that market process, if you like. And I think we did a pretty good job of that because we focused pretty clearly on what we could do rather than expand too quickly and try other things. I just did a little Googling while you were talking there.

So Globex actually launched in 92 and eMini futures in 97. So it's all around the same pattern. Yeah, yeah. So it moved pretty quickly when you think about it, didn't it? You know, it was only a few years. Yeah.

Insanely quick. So then you guys became known somewhere in there when this electronic exchanges, not just online trading, but connecting to the exchanges, you guys became rather well known for the market depth ladder. Yeah. The MD trader,

the market depth ladder. Yeah. Yeah. Um, as most, many people may know there's patents on the md trader there's patents on auto spread i think tts over 100 patents but essentially a lot of them are focused around that functionality and um and that's something that um and for someone who's never seen a tt, what does that look like? Yeah, I mean, essentially, yeah. So the MDTrader was essentially something that Harris Brumfield, our owner, and the guy that bought the company,

it's the guy that was using the product and said, I like the product so much, I'm going to buy the company. And he acquired TT. And one of the things that he did then was he said, you know, we've got to make some order entry functionality improvements. And he described how he used to put prices down on a card when he was in the pit. And he had a static, he had the price down the middle, and then he put the bids and offers next to the prices. So they designed the MD Trader so that the prices were static and the orders would move, but you could never miss the price

because you're always click. If you click a single click to buy or sell, you would always know what price you're clicking at. Prior to that, the prices had moved and it was kind of counterintuitive. If you think about it, you do want to click and know what price you're getting. And so that was the big change and enhancement. And that was one of the things that drove a lot of the bigger traders and the volume traders to the platform because it felt like they're being in the pit right it felt more natural to them maybe i don't know that they viewed it the same way it's just when they saw it it seemed like that oh yeah that makes sense i mean i joined at a time when everyone was kind

of familiar with it and actually there was lots of people replicating that functionality you know in other platforms. But it made sense. And then aside from that, it was just latency. I mean, the latency on the product then compared to what we have today was insane. I mean, it was pretty slow. But it was much quicker than most of the other platforms. And it also worked.

I remember when I joined TT in 2004, we spent a lot of time helping banks and brokers and trading firms support their own installation of the software. And so if it wasn't installed in the optimal way on the right hardware and configured the right way with the routers and everything else, you could have issues. And I remember the unemployment numbers would come out and we'd have different tech guys down at the big clients to make sure everything worked on a Friday for unemployment. And that was where we really built our business was the product worked when they really needed it to. And, and if the software didn't work,

then they'd go and find another platform, another software product. So that would work and make sure they could trade the volume and the numbers. You just reminded me of Robin hood in this recent market crash. People couldn't get out for days on end. Great product, useful GUI, but if I can't get out when I need to, not much use. Precisely.

And I was just going to give an example of the market that ladder. Say you're trading crude oil, right? And for listeners who don't understand what it looks like, if the price, it's crazy how low the price is now. It's like 20 or something, but say's 30 a barrel crude oil you'd have in the middle of the screen 30 and then all the offers above that so you'd have 10 at 30 10 50 at 30.15 100 at 30.25 so all the offers the volume and the price correct or was it always the volume and the price or in the early days, just the price or it had to have the volume? Price, volume numbers, it depends what the exchange is provided for volume at the time. I mean, now we've got very detailed depth and we can estimate volume as well. But I think the volume early on would have been available then,

yeah. So you can see the volume of each order and at the price, yeah. Right. So our example, you had on the left side of each order and at at 29.70. I'm going to put my order just in front of that order because it might provide some support or whatnot. Yeah. And I think what a lot of the guys liked was you could see the market move. They used to say you see the ebb and flow of the market, but you would visually see the bids and offers move up and down the price. And so it was much more intuitive to understand what was actually happening in the market. And you could see, oh, it's moving down, moving down.

You hit the space bar, it would recenter. But you could watch the market move down the price ladder and you could drag it out. Some guys would spin their monitors around so that they're longer. So they're narrow and tall, right? You've got a rectangular shape, but you have it high, so you can have these really long ladders, so you can watch the price movement move over a greater distance up and down your monitor. And they love watching that ebb and flow of the market.

Even today, a lot of guys watch price movement on that ladder. Even if they're using algos or using other tools to initiate orders, they often like to still watch the market movement in the ladder form. It's more intuitive. It's what they're used to seeing and they can picture more easily what's happening. If you ever walk through the NFA offices, National Futures Association, their analysts, they're reviewing disclosure documents and all this. Their screens are that way So they can get more pages on the screen. Little did they know they're like the trainers. So then the auto spreader was another innovation. So tell us a little bit about that. Yeah. Auto spreader or people often call it an auto legger. So essentially you're spreading

two products. If you can establish a relationship, maybe the simplest one is to think of a calendar spread where you're not trading it on the exchange so you want to buy you want to sell the current expiry and buy the next expiry and stick with our crude oil you're going to buy may crude and sell june crude uh other way around usually right so you're going to sell what now and roll the position out forward so you're going to buy out june and sell may and um or whatever it may be and so you're assuming i'm long yeah well i am yes i always think that's the easiest way to explain it um it is you can sell one and when you've sold in when you've sold you go and buy the next expiry that you want to buy and you do rather than try and do that manually and risk being exposed

and a loss on the trade because there's a difference in the price, the software manages and quotes those – can quote. And as soon as you get filled on one contract, it will automatically send your order in on the other so that you can manage that. So you can auto-leg. And there's a lot – I mean, that's an incredibly simplistic way of saying it. What you're really doing is you're managing – you can manage that so you can auto leg um and there's a lot i mean that's an incredibly simplistic way of saying it what you're really doing is you're managing you can manage multiple relationships and you can manage a lot of logic around that you can build a lot of rules now

what we built in the x trader platform um has been enhanced significantly and in the tt platform now there's a lot of logic around managing those spread trades and how you can define certain rules so that you can manage that trade in risk in the optimal way. And it's essentially trading a virtual price or a virtual contract. Yeah, the product will show you a synthetic spread price. Yeah, precisely. And that could be the same as buying WTI and selling Brent crude or something of that nature. Yeah, you can trade a crash spread in there, which is the breakdown of oil. So you can trade the derivative products of oil, and you can trade that as a spread.

A lot of the industry does that. And you can do that within the product. That's another example of how some of the commodity energy goes. Even when the exchange itself, it's not an actual exchange product with a quote. It's just the difference between two different products. Correct. And there's a known relationship and a percentage component relationship, if that makes sense. So how does that work between exchanges? So there's a danger, right, that one side gets filled and the other doesn't, but that's what the platform manages?

Yeah. Yeah. So it can manage that. I mean, any way there's a relationship you could spread, you could spread interest rate products across two different exchanges. You might decide there's a relationship between two equity indexes across two exchanges. So you want to, and you know what that ratio looks like,

the price ratio and what you want to trade. But the reality is a lot lot of that logic you know traders know what it looks like and they're not even necessarily telling us what they're doing so but at least they have the flexibility to build their own logic in there and then the early days it was just here's the few markets you can do this in and now they can basically build whatever auto spreader they want yeah yeah they can yeah and then the latest version is the algo design lab which we took a lot of that logic and that the auto spreader has but now you can access auto spreader from a algo design tool and it's a visual designer so you

can actually take um various market components and establish connections by visually drawing if then, if this, do this, et cetera, and use our auto spreader logic. Now, that auto spreader is basically an algo engine running on a server co-located at the exchange or exchanges if you're trading across multiple locations. So if you're trading CME, it's in Aurora, not too far from Naperville, out in the Chicago suburbs. If you're trading ICE, it's in 350 Cermak in the city. If you trade in Eurex products, it's in Frankfurt, et cetera.

That's a good transition into kind of today's world of API access and algos and exchange gateway connectivity. So talk to me a little bit about, you mentioned it there, but it seems like a natural extension that a lot of clients would go to just API access, or that's hand-in-hand with the platform? Yeah, well, that's the difference between a trading platform and a trading screen, is that you provide multiple methods of access to the markets. And as you know, over the years, many, many firms decided that they could build their

own trading logic in an optimal way, rather than use a trading screen. They may still use a screen some of the time, and they may want to view trades within an auto management screen. But the actual logic to initiate the trades is going to be built on and run on a server co-located exchange. So obviously, we wanted to participate in that. It's been a huge growth area for us there's various methods of accessing the market on the platform now um we have a fix api which is the most common known um language for the financial markets and a lot of the buy side clients are connected to us some of the banks are using us as their market access providers. So if you send an order from a Bloomberg EMSX terminal or some other EMS that's fixed enabled and you're sending fixed orders to your broker, that order may well be routed to the exchange via a TT market gateway because those

banks and brokers are using TT technology to access their markets. So unpack that a little. You're meaning they don't want to pay or set up access to some exchange, so they'll route it through you guys instead? Yeah, so they license our market gateways essentially.

So they'll have screen users, but they have more volume probably coming in via fixed API flow than they do traded on screen. And they need the market gateway connectivity. So for a bank, as you can probably imagine, they keep looking at ways to optimize their spend. They want to spend their internal development resources in areas where they can really add value to individual clients. As much as I hate to say it, writing a CME gateway or a gateway to the B3 exchange in Brazil is somewhat commoditized. We do it incredibly well because that's what we do.

So they use our market gateways, and they can connect all their client flow through our market gateways. They're essentially licensing that technology. And then that feeds into allowing clients to layer on algos and their own logic and things of that nature? Yeah, so the other side of it is the buy-side clients and the proprietary trading groups and how they use our applications. And they want lower latency but easier access.

They don't necessarily all want to build everything themselves. So we find ways to help them. One of the areas we've really expanded into is hosting services. So historically, clients would somehow buy a server or lease a server. They'd rack and stack it in an exchange co-located with the product at the exchange they want to trade. And then they would procure market data, either write directly to the exchange or buy market data from another provider in that location, and then they'd have a source for routing orders.

It's all pretty complicated, and you could have three different providers just to trade one exchange, a hosting provider for your box, market data provider, and an order routing connectivity provider. What we can do now is combine all of those. So you can either have us host your box. We can lease you a box server to run your application. You can use our market data, and you can connect to our trade APIs. If you do that, I said to one client, you know, this is great.

You're bundling services. Hopefully they'll save you some money. It's like, I don't even want to necessarily save money. I just want to simplify the whole process. It's so complicated for me to have to call three different providers and figure out. That was going to be my next question. Are they doing it to save money or to save effort or both? Well, I mean, look, of course they want to save money but some of those services are pretty inexpensive it's more a case of I think for many of the clients that we're working with it's taking the complexity out of it it's ensuring that they're working with a provider they know and trust they may well already be using TT for order routing they may not maybe use our market data but it simplifies the process and

makes it it makes the and they get reassurance on support that they know who they're dealing with on every part of their trading application. I think that's important. The other thing, of course, is that we have global access. So you may have one provider for CME access, another provider for Brazil access, and then have to go to another provider to get access to the LME exchange in London. And that's really not optimal either. Whereas we can actually provide access to most of the global markets for hosting and market access and market data. And then talk a little bit about the execution algos too. So that whole concept as well could be, hey, instead of having to go get a provider and

plug into their execution algos, we'll provide it right here on the platform inside of this environment to make it easier for you. Exactly. So historically, the XTrader platform, the legacy platform, didn't offer access to execution algos. And we had TT order types, some basic time slices, et cetera, and iceberg orders that would help you break up orders and make your execution a little more efficient, but it wasn't overly sophisticated. Even today, we don't really want to compete in that space because there's an awful lot of research and work done in the background to ensure that each product to each exchange is

dealt with in an optimal way. So a firm like RCMX, who we partnered with, they've got years and years of research and ongoing quantitative analysis of the optimal way to break up orders and minimize market impact and create efficiencies on execution. So we now provide access to RCMX. We've also got some of the bank's Algo platforms integrated, and you can initiate orders directly from the TT screen or via FIX. So if you have another application and you want to send it to us in a fixed format, we'll send it on to the algo providers. And then you see your fills come back. So the parent order is the main order. If you want to execute a thousand lots

and you want it broken up efficiently, you'll send the order with instructions from the order ticket and you'll see your parent orders come back into the screen and those and that's connected to rcmx at the exchanges so we're fully integrated and it's somewhat seamless to the user because they just look at it as another order ticket within the tt screen what's been really a concept to the auto spreader just a synthetic order that's getting split up and managed behind the scenes yeah in a way it is. Yes, it's interesting because I think to some extent electronic trading has followed the equities markets. What's been available in equities markets then moves out to futures and commodities.

In this case, the execution algos have been around for a long time in equities. Futures traders in large hedge funds and CTAs, et cetera, have been using algos have been around for a long time in equities futures traders in large hedge funds and ct ctas etc have been using algos and a lot of the big banks use them extensively on their own execution desks but we go out to some large commodity trading firms and they're not using anything at all and there's huge rooms for improvement there and we're already seeing that i mean and if you think of our client base in certain sectors like the commercials and the energy trading firms there's a lot of opportunity to improve those clients' quality execution, which is something that we're actively working on with our CMX and some of the other banks as well. Because it's not easy.

It's challenging to get them to understand the improvements available for them. But once they actually get on the platform and see the improvement and actually get to see some transactional cost analysis and understand economically how it's improving their execution, then it's a pretty compelling story. And to have it all right there inside the platform. Yeah, they don't have to develop to anything. They literally open an order ticket, submit the order, and then they can watch it play. The bank or whoever's using these hours, can they do the, they can set parameters and whatnot right inside the screen?

Yeah. In most cases, so one of the other challenges for some of the banks and brokers is they want to ensure they have good risk management and controls. If you're using execution algos, one of the things that we can do with RCMX is have those child orders routed back through the TT platform, and therefore the banks and brokers are happy or comfortable that they have control because they set pre-trade risk through our platform for market access, whether it's from a fixed provider or an API client or the orders have been routed from RCMX. So the banks and brokers are comfortable with that model.

The end user client knows that there's a pre-trade risk layer involved that manages all of their orders. And there's really no difference to whether the order's being executed from an algo engine from RCMX or whether you click trading on the screen. All of the risk parameters and controls are the same. Yeah. And we should have covered that earlier, maybe. So maybe spend a couple of seconds talking about those risk controls. It's to avoid like fat finger issues or the machine going crazy. How does that work behind the scenes? Yeah. So, well, it can get very complex. And it really varies by, it can vary even by bank or broker.

They'll use different types of risk. The obvious ones are obviously fat finger, position limits, and credit limits. There's other risk controls that we have in the platform now around price reasonability so that you're not entering something too far out of the market, percentage of the market, percentage of the book, that type of thing. So there's certain things, certain controls that certain banks use that go even well beyond what you would normally consider pre-trade risk for electronic trading.

And that's been a growth area over the last year or so, actually, on the platform. And back in the early history of the firm, was that a big lift to get, right? Because you had to convince the FCMs and whatnot that, hey, you've got the risk under control, that they can trust your connection and your risk control. Yeah. So I think you earn that trust, don't you?

You can't sell it. You earn it. And you prove the worth of your platform and technology over time. And so you become one of a few approved vendors. One of the reasons that we do a lot of business today, frankly, is that we are an established vendor for all of the top 20 FCMs, all of the top banks and brokers. If you're a startup company and you have the coolest technology

you could ever think of, trying to get through that procurement process and onboard it as an execution vendor for a bank is nigh on impossible and um and they'll you know anyone will tell you that it can take forever and then you don't pass they'll literally fail um so we're at we've gone through that before we've actually re-signed most of our contracts or all of our contracts with the banks because we've um upgraded the platform and because of the the nature of the technology we had to rework our license agreements with the banks. So they've all been renewed over the last two years. It's relatively easy for us to add services like Elgo Access, et cetera.

It's really hard for other companies to become an execution vendor for a bank or a large broker just because of the controls they want. But the banks like it because it adds an extra layer of risk protection, right? Like, hey, we've got our own risk controls. TT's risk controls are layered on top of that. The end customer's risk controls are layered on top of that. Yeah, precisely. I mean, in many cases, we really are the bank's risk controls.

They'll have other controls post-trade, and they can set risk at some exchanges. But in most cases, we are the pre-trade risk for the bank. They're using our software for that. Which is great. And Fatfinger, just for anyone who doesn't know, is, hey, I'm trying to buy 10, and then accidentally I entered in 1,000. So the platform would basically kick you out.

You have limits, right, of this user can only do a max of 15. Yeah, and you can set it by product as well. So, you know, it may be for certain products, you might allow someone to trade 100 lot, but on these other products, I won't let him trade more than 20 lots. And so you can specify, the risk managers can specify that by product

or even expiry. Typically that is in conjunction with the FCM or the bank as well, right? Precisely, yeah. Alright, we're back from a short break talking about how the trading technology space in general and trading technologies in specific has grown over the years and kept up with changes with the industry. So tell me a little bit, Guy, about, we've talked about some of them, but we don't need specific names, but what types of clients are using TT these days these days yeah that's a good question i mean because it's really broad um

i think i mentioned the top 20 wall street banks or fcms and they have a certain set of requirements and they're buying certain types of features and functions they buy our market access they're using our screens on the desks internally they're using screens on their broker desks. Then we have very large within the energy and commodity trading commercial firms, as I would call it, and they have another group of requirements or asks, and so they're pulling us in another direction. Hedge funds, some of the largest hedge funds are large clients. They'll use TT, maybe build their own application as well but that's it they don't they don't want multiple vendors and so

and hedge funds tend to have their own specific requirements the um we're talking about execution algos but i think that's an interesting addition for them and the fact that our platform is entirely broker neutral now is that energy firms or hedge funds can access multiple brokers which commonly they do on one common platform and so that's really helped us grow specifically in that area we still have a lot of proprietary trading firms which is to a certain extent where we grew up and where we started because they don't want to build all their own technology and they may use us for ap access rather than the screen as well. So there's a mixture there. So it's a pretty broad client base. And obviously with that, you're going to get different sets of requirements and enhancement requests. And so

it's always a challenge to accommodate everybody. Basically, anyone who's trading exchange traded futures in size is likely already a client or a potential client yeah well a lot of them are and especially in commodities i'd say we're pretty dominant um and yeah i mean some have built their own technology and some will use another provider but we've got i think we do tend to migrate towards the larger firms just because of the nature of the technology yeah and how how have their demands and desires changed over time so in the beginning they like we talked earlier they just like the market depth and ability to kind of feel the flow but these days it's more about data access and market structure yeah again it varies

by um it varies by client type for the banks we've expanded our market access so that we can provide access to pretty much every futures exchange. We added a bunch of markets this year. Johannesburg Stock Exchange, MOEX, which is Moscow, Korea, Thailand, MEXDA, Mexican Exchange. Nodal is a U.S. energy exchange. Access to the Chinese markets. We're about to launch BIST, which is the Turkish exchange. Athens and Warsaw will be later, and NSC in India and Taiwan as well. And the reason we're doing

that is just because if you go to one of the large banks, they either build this technology or they could buy it from a vendor. What they don't want to do is buy it from five or six vendors. They want one all-in provider. And so you're kind of a one-stop shop and you really so if you want that business you have to build all those markets and create all access so that's been a focus over the last of year 18 months and will continue to be through the end of this year and then at that point i think we'll have access to pretty much any futures exchange that the major and that's a team of engineers working to plug into the APIs of all those different. Yeah, exactly. Yeah. I think we get pretty good at it.

Who's leading who in there? It seems like you guys might have more experience in how it should work than some of these smaller exchanges. Well, yeah. They're all different. They have different rules, rules of engagement. And so there can be a challenge. They have different rules around how you connect, whether you have to have a member connection, things like that.

So it's never straightforward. The nice thing is, fortunately, there's a few providers of matching engine technology globally that have done a pretty good job selling to all of the exchanges. So often you're encountering the same technology in Asia that someone in the U.S. is using. And so in that way, it's somewhat familiar. But they're all different and they present their own challenges.

It's not straightforward at all. If it was only about writing some software code, it would be easy. It's much more complex than that. And we didn't cover this earlier, but we're talking all futures. Are there stocks and options? What else is available?

So that's all futures. In Brazil, we do have equities only because it's available on the same matching engine via the same API. But we've not expanded into equities at all other than that. And currently, while we're migrating and have other plans, we're not planning to do that. We do offer access to the on-the-run treasuries

on the BrokerTech, Phoenix, and the NASDAQ markets. That's probably been pretty exciting the last couple of weeks. Yeah, there's some interesting volume there. And we were talking about auto spreader, and that's another use of auto spreader is trading the basis cash treasuries against the futures. And that's another set of clients that we have that will use that. That market's certainly been interesting over the last few weeks.

Yeah. So let's talk, what's next for all these customers? What's next for TT? What sort of innovations are they looking for out of you guys? Yeah, that's a good question. I wish I'd like to talk about that. As we move through our migration and we complete it, we'll have more bandwidth available to really expand.

One area that we've been growing over the last year or so is surveillance. So we acquired a firm about two years ago, integrated into the platform, and it's a product called TT Score. And what it basically does is provide surveillance technology to identify areas of regulatory concern. In other words, mostly spoofing, but market the closed, market the open, that type of thing.

And as you probably know, and it's in the press regularly, the CFTC in particular have been pretty aggressive in following up and convicting bad players, if you like, and trying to clean up the business to keep it fair and ease open access for everybody. So historically... Sorry, go ahead. No, I open access for everybody. So historically, the banks have surveillance technology, and the exchanges have surveillance technology, but a lot of the buy side or trading firms don't,

and they need to address that because it's a gap in their platform or their trading. Right, so that's what I was going to say. We're looking at a big hedge fund that has 50 PMs or whatever, and they're all doing their own trading on their own platform. The bosses of that hedge fund don't want to come in one day and be like, oh, John over in booth 23 was spoofing all last year, and we didn't know about it. We have a regulatory problem.

Yeah, that's exactly right. They definitely want to know. It's funny, there's a head in the sand mentality from some firms. They don't want to know. That's usually the smaller firms. They think that if they didn't know about it, then they're probably protected. And that's obviously not the case. It's the entire opposite. If the regulator does come in and identifies trading activity that is spoofing or wherever it might be, they're more likely to follow through on prosecutions if the firm hasn't been trying to address it or wasn't

aware of it at all and hasn't taken appropriate steps. I think that's part of the responsibility of a compliance officer at a trading firm. So you'll see now, yeah, a lot of the commodity energy trading firms and the proprietary trading firms and hedge funds are all looking at? Well, what do I need to do? And there's a challenge there because most of the platforms on the market, if not all of them, are rule-based. So you get a platform, you write some rules, or they've written them for you. And if you tighten the parameters on those rules up, you'll get thousands of alerts every day. Most of them are false positives. They're not anything of concern. And if you tighten the parameters on those rules up, you'll get thousands of alerts every day.

Most of them are false positives. They're not anything of concern, but it's going to be a burden on the compliance team, surveillance team at the firm to actually go through those alerts and determine whether there's anything of concern. If you widen the rules to avoid all the false positives, you run the risk that somebody's actually trading in a malicious way and you didn't detect it and obviously that's a problem and some of the cases you'll see that have hit the press in the last year or so were with some of the largest banks on wall street and their own traders didn't get

detected or picked up by their own surveillance platform and um and so you know they we spent a lot of money on technology and surveillance and and yet they didn't capture everything. Which seems to me as a contrarian of like, if you, right, if they're inside the gates, they're going to figure out a way to get around the surveillance if they want to. Well, I'd hope that the compliance teams wouldn't allow that. There's a thing called collaborative trading, which a lot of the platforms don't pick up. So I've got a buddy in Geneva, let's say, and another in Houston, and we're all on three different desks, and we're all trading the same products.

Then you can collaborate between the traders to stack up the market and then reduce orders in the book and move the market in one direction so that you influence the market and get the prices you want. So you can move the market around in that way, and a lot of the products on the market don't detect that so what tt score can do is it's a machine learning ai intelligence platform and it will monitor all the trade flow and predict based on a score of zero to 100 how likely it is that you would attract regulatory concern and it's it's the technology itself is trained on data that's attracted regulatory attention. In other words, well, actually, it's been used in prosecutions. So we know that the machine

can identify certain trading patterns, and it's pretty accurate in predicting where there may be areas of concern. Then what a compliance officer or a surveillance officer can do is then look at that data and determine whether there really is a problem there or not. Have you been watching the most recent season of Westworld? I have not seen it yet. I've watched the previous one. There's a big AI machine learning that basically does what you're saying for the whole world and monitors every person.

I should have said spoiler alert first. um anyway that made me think of it so essentially hey let's ai it and take it out of the compliance's hands and and it's too much data to be monitoring anyway yeah and if you're on the tt platform it's available immediately you don't have to rack and stack and configure and everything else we can because it's delivered software as a service on the platform, it's immediately available. And we now take drop copies from the exchanges. So even if you're trading via other platforms and other methods, we can capture all of your trade flow and survey all of it. And that's now got us into the data business, because if you think about that, we now have all of your audit trail data, all of your trade data. We can present that in TT Score for surveillance,

but we can also help you store and recover that data whenever you need to. And so that's a growing area for us as well, because firms find it increasingly difficult to manage or to store their own audit trail data and have it available whenever an exchange calls. I've been in meetings where I'll literally say that. I'll say, you know, some firms have a challenge. I don't know how it works here, but if ICE calls you and says, I want to see what this trader or this account was doing for this particular day,

two years ago, they run around, make some calls. Somebody has to go back, figure out which database that's in, figure out how to get it into presentable format. And it takes a few days or a few weeks. And they usually nod and look at each other and they'll say yeah about two weeks um and in the tt platform it's available pretty much immediately that we have an audit trail forever so we're leveraging the cloud and that data is available uh via a pretty easy access tool and you can pull it anytime you need it what what does your world look like in this 30 market crash and limit down moves and everything the exchanges have you seen everything in the exchange world has been smooth as can be yeah i think so mostly yeah um yeah it's been amazing volumes are high but i think everyone's

coping with it pretty well um our only concern to the Yeah, I mean, it is for us and for others. I think... I mean, just the overall futures world in the exchange process, and there's firms going belly up, but it hasn't affected anything. Yeah, exactly. And you saw, I was going to mention that. Our only concern is that firms blow out and they get caught. Obviously, we saw the Ronan News and ABN Amro's news recently about a client.

They're pretty extreme cases of options trading strategies. And generally, you hope that that's not going to be prevalent and there won't be more firms disappearing because obviously that's not a good thing. But it seems like the industry is holding up pretty well. And this is really extreme test. So I think that's a positive. All right. We're ready to wrap up here with Guy, but before we let you go, I'm going to ask you some of your favorites like we do with everybody. So we'll do some rapid fire favorites. Favorite band. Favorite band. Oh, it would have to be a Pink Floyd or Led Zeppelin. I have to pick one, I suppose.

Pink Floyd. Which one are you desk drumming there? Pink Floyd? Yeah, that would be Pink Floyd. I'm embarrassed to know. Is Pink Floyd an English band? Yes, they are. Yeah.

We're going back a while here. The favorite hobbies outside of work? All sports. Love soccer, football, as I call it, and rugby. Big fan of watching rugby. And I'm a big Liverpool fan. And I'm really disappointed. I was going to ask your favorite Premier League team.

Yeah, Liverpool. And we're 25 points clear. And now it's still not clear whether they're going to allow us to win the league or not because, obviously, postponed probably not going to resume this year. They went first by 25 points? Yeah, runaway winners, but now maybe they won't be awarded the title because the season never finished.

And I don't know about you, but I'm finding it tough at the moment not being able to watch any sports at all. There's nothing on TV I've taken to some online poker I've done there's a marble racing, go YouTube that that's worth 10 minutes marble racing?

they build these tracks on the beach and they have names for each marble like here comes fireball and blue ocean it's exciting go check it out i will we'll put it in the show notes too uh favorite favorite vacation spot that you're going to go to as soon as this quarantine is over oh okay well the one i would go to so i have two uh um because i've been thinking about that so one is the lake district which is where i grew up and um my

brother's a house there second house and i like spend time there my parents are still, but I do vacation there because I like to walk on the hills there and get out and about. And I would like to do that after this is all finished. So give us the English geography there. So it's up. It's Northwest. It's the top left hand corner. Yeah. Okay. Google it. It's beautiful. It's absolutely beautiful. And if you ever get a chance to go to England, it's a place to go to. If you like walking on what we call the fells, the hills are called the fells. And it's pretty remote, beautiful lakes. And the other place I like to go to, I've enjoyed more recently is Thailand. So at some point I'll have to go back there.

That's the big question of whether people will go back to these places that were hit hard with the virus. Yeah. What are they going to look like when you get there who knows what businesses are left so i don't know i don't know how about favorite royal favorite royal um that's interesting who's my favorite role i think prince william i'm not so much much a Harry fan, especially after what he's done now. So that'd be Prince William. Yeah. What's the English take on that? Well, they bailed, so we're not big fans of that. They've deserted us. And now they're hanging out in California. Well, Trump just said he's not paying for any security, I think.

Quite right. They should pay for their own if they need it. And last one we asked, ever in your favorite Star Wars character? Oh, I'm not a huge Star Wars fan, but I do like Chewbacca because I think, and he's smarter than he looks, right? And he's very loyal and just a cool guy. The one thing I do know about him is,

did you know that they had to change his name in Italy? Because in Italian, Chewbacca almost literally means chewing tobacco. I did not know that. That's good. I want to know his Italian name. I'll have to go look that up. Yeah, I don't know what it is, but it's different. Anyway, there you go.

All right. Well, thanks so much, Guy, for joining us today. My pleasure, Jeff. You'll get to follow Trading Technologies on LinkedIn and on Twitter. Who's your guy over there, Patrick? He does a good job on Twitter. Yes, he does. Yeah.

So thanks so much, and we'll talk to you soon. All right. Thanks again, Jeff. All right. Bye-bye. Bye-bye. You've been listening to The Derivative. Links from this episode will be in the episode description of this channel. Follow us on Twitter at RCM Alts and visit our website to read our blog or subscribe to our newsletter at rcmalts.com.

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