Trading Technologies Debuts Infrastructure-as-a-Service Offering

In 2018, Chicago-based Trading Technologies (TT) began a journey away from just being a provider of trading tools to futures market participants, to covering screen-based execution products and data analytics. Now, with the launch of its infrastructure-as-a-service (IaaS) offering, the company has completed its transformation into a full-service vendor.

TT has announced Graystone Asset Management as the first formal client of its consolidated IaaS product. The firm, based in the Cayman Islands, is an excluded person under Cayman law, trades on a proprietary basis in currency derivatives markets and cryptocurrencies, and advises high-net-worth individuals in these areas through its funds. It currently manages the Graystone Balanced Arbitrage Fund, which operates as a Cayman Islands hedge fund.

The firm, which defines itself as “bridging liquidity between the fiat world and the digital world” through its activities on conventional derivatives exchanges and cryptocurrency markets, according to senior quantitative advisor Jame’ Groves, is live with the product. Graystone is also deploying the TT platform—and the vendor’s advanced execution and algorithmic tools—as part of the deal. Prior to the implementation, it had relied on connecting to venues itself and on its proprietary technology—although it will still use its own code with TT’s products.

“TT provides a very unique product in its time to market and the cost of time to market,” Groves says. “Coming from a proprietary trading background—our expertise is in high-frequency trading—the general thinking is that you just build it yourselves. It’s not so much that building an order management system (OMS) is too difficult in terms of time and dollars, but you have to couple that with the cost of co-locating in the data centers of the various venues you need to transact with. And on that side of the ledger, it’s extremely expensive. And TT, especially with their Algo Design Lab features, and with Autospreader, it’s really limitless. When you couple that with an infrastructure that’s co-located, for us, it’s a turnkey solution that allows us to go to market very rapidly, and it doesn’t make any sense to go in-house.”

Natural Progression

For most firms, a shift from its traditional heartland of providing execution tools for futures markets would be a radical re-engineering of its core functions—operating points-of-presence on a global basis, co-locating in exchange data centers and providing ultra-low-latency connectivity is not, after all, a task for the faint of heart. However, as TT’s chief information officer, Mike Mayhew, explains, much of the foundation had already been laid.

“Quite honestly, I feel like we’ve been doing this for such a long time that we don’t see it as that big of a migration step,” he says. “We’ve been hosting customers on TTnet, for instance, on what customers feel is dedicated infrastructure—although there is an application management aspect to it on top of that. We operate a 24/7, follow-the-sun model. We have support and that includes systems engineering and network teams in London and in Singapore, who are highly capable when it comes to supporting our network globally. We have highly resilient networks to begin with and manage thousands of servers today for our internal use. I feel that if I look across the operations teams, it’s just a natural progression.”

Indeed, this was the central thrust behind CEO Rick Lane’s decision to diversify the product offerings on hand at TT to begin with. The company already had this connectivity, the global footprint and everything else in place to support its existing customers, Lane told WatersTechnology in March 2018, shortly after he authored a blog post outlining the strategy.

“I do think we’ve—probably for longer than I’d like to admit—had a very unique asset in our global network and backbone, which was really all built to serve one purpose, and that was to be a screen company,” he said. “For too long, I think, we’ve under-utilized that.”

Pieces had begun to be arranged on the board before this, notably in the form of TT’s October 2017 acquisition of Neurensic, and its move into the surveillance and analytics space. The introduction of TT Score would later provide the backbone of the analytics arm. Then, a year later in October 2018, it announced that it was consolidating a number of its existing workflows into a single OMS product.

“I may have used the phrase [back in March 2018] that we don’t consider ourselves a screen company anymore, and this really is a big part of that strategy and that initiative,” Lane said at the time. “We’ve now built the technology platform we intended to build, which will serve as the foundation for us for the next 25 years, and with it, we can really branch out of that core futures execution wheelhouse we’ve known so well for the last 25 years. TT OMS really is the first big product launch that shows the fruits of that labor, I think.”

One of the key aspects of the new IaaS product is that using it doesn’t require a full-blown subscription to TT’s other services, Mayhew adds. In addition, explains Brian Mehta, chief marketing officer, it gives the vendor the ability to expand its coverage beyond just its traditional asset classes—recent forays into crypto notwithstanding. Future development of this platform, for instance, could include connections into data centers such as those in Mahwah, New Jersey, which service NYSE.

“These offerings don’t necessarily have to be with existing TT clients or organizations that utilize our trading platform,” Mehta says. “This can be completely independent—yes, there are derivatives offerings, but if you get into equities or foreign exchange, we could offer the infrastructure capabilities. That opens up a whole new line of clientele that we may not have had or pursued in the past.”

[LISTEN: In October, Rick Lane joined the Waters Wavelength Podcast to discuss the challenges of completely shifting from a monolith, hard-install platform to a software-as-a-solution (SaaS) delivery basis. He also talks about Chicago’s burgeoning institutional crypto scene. Click here to listen.]