Equity and Options Technology Provider Looks Back at Volume and Message Explosion
Sterling Trading Tech is one of the firms in the eye of the storm for the rise of retail equity and option traders. John Lothian News caught up with their president and head of risk management to talk about how they fared and how they continue to deal with the influx of retail customers and resulting trading activity in 2020 and 2021.
Jim Nevotti is the president of Sterling Trading Tech and Ravi Jain is head of risk management. They talked about the issues that developed as equity and option volumes exploded last year and earlier this year. For example, messaging rates from all the new traders tested the strength of the systems Sterling had been implementing over the last several years.
The intra-day volatility of some of the meme stocks in January this year created unique challenges as volatility was as high as 1000%, something Jain said he never expected to see.
Risk management and real time risk calculations became critical as some of the meme stocks soared 100%, then dropped 50% after a trading stop.
When traders were buying $800 calls for a $200 stock, the risk models were left wanting, Jain said.
The implementation of cloud-based risk management tools during the work-from-home pandemic has allowed seamless use without having to connect to VPNs or remote desktop applications, Jain said.
Nevotti talked about some of the bottlenecks they saw in trading as market data, especially in options, exploded during those busy January 2021 trading days.
They also said the new Sterling Trading Web and Sterling Trader mobile apps were something that had interoperability, though you can only use one at a time because of the rules around data. Sterling is also working on an iPad optimized version.
This has been a John Lothian News report. Please visit us on JohnLothianNews.com.
The video has been reported by John Lothian and edited and produced by Patrick Lothian.Follow John Lothian News on twitter: @JohnLothian @MarketsWiki @JohnLothianNews @MarketsReformWiki @JLNOptions @JLNEnviroEnergy @JLNMF @JLNFinancials