Tom Haldes is senior product manager, trading automation at Trading Technologies. He is responsible for driving the vision and product strategy for TT’s automated execution capabilities, including grey box application technology, interfaces for black box trading and historical tick data systems. Prior to joining TT in 2006, Tom was head of global market data development for Citadel Investment Group, responsible for developing the firm’s real-time data infrastructure pricing and historical tick data. He also held senior management positions with Reuters. Haldes talked with MarketsWiki‘s Jim Kharouf.
Q: How did you get into the business?
A: I started as a UNIX developer and a few years later Reuters was developing what is now called the Reuters Market Data System (RMDS) and I joined that project. RMDS is UNIX-based and has evolved into the biggest front-office market data distribution system out there. I went on to manage technology operations for Reuters in the Southeast region of the United States. Reuters acquired a consultancy in the late 1990s and I became a principal consultant for them. After that I joined Citadel.
Q: A lot of people are interested in Citadel because of its size and its growth story. What did you think of Citadel while you were there and what do you think of it now?
A: They have an enormous amount of talent in their research and IT groups. They have been impacted by the global financial crisis but they have very capable people.
Q: What was it like working there?
A: It’s very much a meritocracy with very smart, world-class people. The talent level is extraordinarily high.
Q: You are responsible for TT’s automated execution technology strategy. Most traders associate TT with its classic MD Trader, and point and click technology. What are you working on now in terms of automated trading software?
A: We will be announcing some high performance proximity-based automated trading products. These products will include systems for advanced synthetic spread trading with super-low latency. For us, the name of the game has always been speed and that will be the case with this new line of proximity-based servers. I can’t give a specific launch date, but look for something in the first half of this year.
Q: In light of the current economic conditions, can automated software work?
A: Absolutely. The level of volatility that we see today is – from a historical perspective – at unprecedented levels. That demands automated systems react faster than ever to achieve their goals. And what is generating this volatility? It’s automated systems, such as automated market makers and high-frequency traders.
What’s changed is the granularity of acceptable performance. Not too long ago, the industry measured things in milliseconds or more. Today things are clocked in microseconds. Now it’s really a higher level of performance.
Q: What are some of the key components you at TT look at when developing new systems that optimize that or give the edge to traders going forward? Speed, of course, is one of them.
A: It really does come down to speed. Proximity-based hosting and co-location will be the watch-words as the industry evolves over the next couple years. Traders are just looking for ways to minimize the time to and from the matching engine.
Traders are devising more and more sophisticated models and they are really all performance driven at the end of the day.
Q: When you look out at the trading technology (no pun intended) landscape, what will the marketplace look a year or two years from now?
A: High performance execution and proximity-based computing. Those are really big factors in the industry right now.
Q: Is there any room left for the point-and-click traders?
A: Absolutely. You have to look at classes of market participants and what they are trying to do. Automated trading is great for high-frequency traders looking for sub-second alpha opportunities. On the other hand brokers, hedgers and position traders are more apt to place and work their orders manually. In these situations, we’ve found traders still prefer the functionality and power of X_TRADER’s MD Trader click-trading interface.
Q: What is the biggest thing that people do not understand or know about what goes into automated trading software?
A: Some people think the complexity of the algorithm or automated strategy is somehow correlated with the alpha generation that the strategy is going to provide. That’s a common misconception.
Extremely complex algorithms do not necessarily outperform simpler strategies in terms of P&L. Discipline and ultra-fast execution remain the cornerstones of success in automated trading.