Architects of Electronic Trading: Technology Leaders Who Are Shaping Todays Financial Markets

Praise for Architects of Electronic Trading "Within the financial industry, it is rare to encounter a work about innovation that is not focused on mathematical models or regulation-driven market structure changes. Architects of Electronic Trading is a refreshing standout, focusing on the rapid technological innovation driven by a niche sector of the financial industry. Ms. Hammer strikes a balance of introducing complex technical concepts to the layperson, while discussing cutting-edge topics of interest to practitioners. Her work aptly captures the inspirational excitement and optimism of these little known innovators and entrepreneurs." —Jennifer Wilson, Partner, DRW Trading Group "Technology in electronic trading is much more than just squeezing out the last microseconds of latency. This book gives a broad overview of many other important uses of technology such as risk control, data quality, and automation, focusing on key people and how they see their challenges. This novel approach makes it a very interesting view into the modern landscape of electronic trading." —Robert Almgren, PhD, President and cofounder, Quantitative Brokers "The industrialization of financial services in general, and trading in particular, did not change much from the seasonal fairs and markets of the middle ages through the 20th century. The great leap was the coming of the digital age that allowed for straight-through processes, scalability and analysis of large amounts of data, and complex parametrics in real time. This book is a comprehensive survey of the motivations, expectations, risks, and successes of the architects in their harnessing the potential of these new technologies. For those looking to the future, Architects of Electronic Trading provides ample food for thought directly from the true architects themselves." —Richard Heckinger, Vice President and Senior Policy Advisor, Financial Markets Group, Federal Reserve Bank of Chicago " Architects of Electronic Trading is a valuable resource for anyone who wants to understand what is shaping the financial industry now and which technology is likely to play a role in the future. This book comprises a series of well-presented interviews with experts, whose lucid views provide fascinating insight on a technology-dependent industry that is changing rapidly." —Adam Cox, Editor-in-Chief, Automated Trader "Technology is central to today's financial markets, and all areas of the business stand to benefit from this comprehensive presentation of the key technology trends in our industry. Stephanie Hammer's work is unique in that it covers a broad range of innovative applications of technology that normally aren't publicly discussed. By choosing a broad approach rather than a specific area of focus, she succeeds in giving readers a useful 'big picture' perspective." —Vassilis Vergotis, Executive Vice President, Eurex "Anthologies about trading have always disappointed me by either being ego-driven 'aren't I wonderful' pieces or an 'alchemist's guide' to markets for the reader who wants to know the secrets of trading. Stephanie has written a book that actually engages the reader in close reading and thoughtful introspection." —Larry Schulman, CEO, Cheiron Trading LLC "Stephanie has done a tremendous job in giving the reader an invaluable insight into the minds that have reshaped the trading industry with their innovation, technology, and vision. This book takes on some complex topics and succeeds in making them understandable for all in the markets. I learned a lot." —Mohan Virdee, CEO and founder, Markets Media

Foreword vii Acknowledgments xi About the Author xiii CHAPTER 1 Meet the Architects 1 Agents of Change CHAPTER 2 Business Challenges 7 Driving New Technology CHAPTER 3 Laying a Strong Foundation with 13 Transformational Technology Suhit Gupta, Technology Consultant 14 CHAPTER 4 Hardware Acceleration with FPGAs 23 Jan–Dirk Lueders, CMT, Capital Markets Trading, and Robert Walker, xCelor 24 CHAPTER 5 GPUs 33 Affordable Desktop Supercomputing Gerald Hanweck, Jr., PhD: Hanweck Associates 34 CHAPTER 6 Microwaves in Trading 45 Conquering Resistance Mike Persico, CEO and Founder, Anova Technologies 46 CHAPTER 7 Cloud Computing 59 Moving toward Acceptance Ken Barnes, Options IT 60 CHAPTER 8 Globalization and Automation 69 Unfinished Business Justin Llewellyn–Jones, Fidessa Corporation 70 CHAPTER 9 Room for Improvement in Risk Control 81 Mark Gorton, Tower Research Capital 81 CHAPTER 10 Trading Systems 89 Dealing with Velocity Kevin Kometer, David Hoag, and Ian Wall, CME Group 91 CHAPTER 11 Technology and Alternatives 99 Benefits of Better Data William Murphy, The Blackstone Group 100 CHAPTER 12 Data Centers 107 Harnessing Networks John Knuff, Equinix 108 CHAPTER 13 Evolution 121 The New Revolution in Trading Systems Design Jürg Spillmann and Wolfgang Eholzer, Eurex Exchange 122 CHAPTER 14 FIX 131 The Power of Standardization W. Brennan Carley, Thomson Reuters 132 CHAPTER 15 Big Data, Big Opportunities 143 David Siegel, Alan Choyna, and Clara Bonaccorsi, Bottom Line Metrics 144 CHAPTER 16 Social Media in Trading 153 Making Sense of It Joe Gits, Social Market Analytics 156 CHAPTER 17 The View from Emerging Markets, China 167 Ming Hua, Southwest Securities Company 168 CHAPTER 18 Special Focus 177 The Shortage of IT Talent Daryan Dehghanpisheh, NYSE Technologies 178 CONCLUSION A Call for Continued Education 187 Index 189

Stephanie Hammer is a professional marketer and freelance writer. She has fifteen years of experience in the listed derivatives markets including time as a trader at a proprietary trading firm. She began her career at Eurex Exchange and also served as head of communications for the exchange in Frankfurt, Germany. Stephanie holds a bachelor's degree from Bryn Mawr College and a master's degree in international relations from the London School of Economics and Political Science. She is fluent in both Spanish and German. Stephanie lives in Chicago with her husband and two daughters.