September 2009
Behind the Scenes.
The technology team of most companies is a hidden face exposed only when an issue arises. In sharp contrast to average FCMs, the Advantage Futures technology team is at the forefront of the firm and serves critical functions to the trading community. “Technology used to be the guys that hid in the dark back room. Now it is the face of the firm to the client as technology evolves,” says Tom Guinan. The Advantage technology team monitors and continually improves their multimillion-dollar technology infrastructure to offer the quickest exchange connections and optimized trading computers, all with a focus on speed.
In 2003, the day the doors of the firm opened, approximately 80% of traders were trading in open outcry pits on the trading floor. During the firm’s early days, Joe Guinan, CEO and Chairman, and Tom Guinan, Chief Technology Officer, made the decision to invest heavily on technology infrastruc- ture, realizing the advantage of creating a network with the fastest core devices to handle as much messaging as possible. They continue this focus on technology and network improvements to be more efficient and quicker than other FCMs, as they continue to exceed the increasing demands of today’s sophisticated trader. Electronic trading now accounts for 80% of all trades versus 20% five years ago.
Millisecond to None.
Several years ago traders were talking in seconds, now milliseconds and micro- seconds. Trade data streams real-time. The financial industry has a constant evolving technology infrastructure, influencing speed that can directly affect traders’ profitability. Because exchange matching time is so quick, other areas are critical for traders to increase their speed of trades including server proximity, network and exchange connectivity, and trading machines.
Advantage Futures server colocation is a global solution with six state-of-the-art data centers worldwide, constructed with cutting edge network equipment and security devices. This service provides the closest proximity of servers to exchange matching engines, and each data center is equipped with redundant direct exchange connections for high-performance connectivity, speed and reliability. These facilities are outfitted with state of the art networking equipment that exceed all exchange recommended standards, typically operating at less than 20% capacity during peak market conditions.
Computing hardware and software are rapidly advancing, and if not configured and optimized properly for the appropriate front end system, it can cause a degradation in performance. According to Advantage Futures technology team, hardware and software optimization is the key to maximum performance during peak market conditions. “Extra bells and whistles that come preloaded with factory installs from hardware vendors can have a negative impact on performance” says Ambaj Sharma. “Advantage works with each individual client to build optimized workstations to maximize performance suited for each unique trading style, technique, and frontend.“
Client Driven Decisions.
Nearly 90% of the Advantage technology team’s day deals with client relationship management. Traders don’t have time to research all options. The Advantage technology team can provide customized solutions that meet client needs, whether it relates to building trading machines, advising clients on writing directly to exchanges, server connection capabilities, or front-end software assistance. Advantage clients have found this interaction with the technology team to be very responsive and beneficial value added service.
Occasionally the technology team provides additional services for clients. Not only do they build servers and set up trading equipment, but they also build private customized data centers to meet client needs. With this dedication to clients, Advantage is a technology service provider, not just a technology support team.
Expanding the Infrastructure.
The Advantage Futures technology infrastructure is continuously expanding and improving, with addition of new data centers, exchange connections, disaster recovery, and front ends. Client demands and new exchange offerings are the driving forces behind this continuous expansion and improvement.
In January of 2009, Advantage built a new datacenter in Frankfurt Germany. This build-out was necessary to facilitate several client requests to make available the new and fastest connectivity option being offered by Eurex in Equinix (FR2), with sub zero match times. Advantage’s Chicago data centers and Frankfurt datacenter are connected via a high capacity fiber optic line, which also gives European clients fast and reliable connectivity to the US markets. “One client in London chose to use our Frankfurt data center for connecting to the CME Group, and told us it was the fastest connection he ever used in Europe trading the CME E-mini S&P. Previously, his trades had to make it to Chicago from London via the internet, and now he connects to Advantage’s POP in Frankfurt via the internet, and rides Advantage’s high capacity fiber optic backbone to Chicago, which is faster and more reliable that the internet,” explained Sharma.
Several years ago Advantage had only one client interested in colocating a server, and now we have over a hundred, many of whom host multiple servers with the firm. This increase in client demand for server colocation implies that proximity solutions are the key to algorithmic trading, due to it’s reduction in execution times and elimination of any extra points of failures, such as the internet or private lines through outside carriers. In addition to increase in performance and reliability, proximity solutions also gives Advantage clients the freedom to trade from anywhere in the world without giving up any edge. Recent growth in demand for this service impacted the decision to expand Advantage colocation space in August by 100% in Telx’s downtown Chicago facility located at 350 E. Cermack. Advantage now offers more than 500 square feet of space for server colocation at this facility alone.
Advantage Futures has multiple trading facilities offering trading space for clients, including the Chicago Mercantile Exchange building, the Chicago Board of Trade building, and the Downers Grove facility located in the western suburbs, which also serves as Advantage’s hot disaster recovery location with active traders. This hot DR facility is outfitted with a 850 amp power back-up generator, which can provide clients uninter- rupted power in the unlikely event of a power failure. In addition to being a hot DR site, Advantage can also lean on its Downers Grove facility for offsite statement, e-mail, and data backup. Unlike many other disaster recovery facilities that are brought online for testing on a weekly or monthly basis, Advantage’s DR site is always online for production.
Advantage Futures provides 24-hour technology support for many leading front- end trading applications and exchanges. While most Advantage Futures clients are professional traders or propriety trading groups, Advantage does offer front-ends for retail clients who might trade less frequently. New front-end alternatives are evaluated and implemented on a regular basis as client needs arise.
Staying Connected.
The Advantage technology team has a breadth of knowledge through experience, education, and critical relationships with exchanges, front-end vendors, and hardware providers. As advancements in technology rapidly emerge, the Advantage technology team continues to build knowledge to provide clients with the most efficient solutions to serve their trading style and needs. Constant communication with various exchanges along with hardware and software vendors keeps the technology team at Advantage educated and up to speed with any and all new developments in the financial sector.
As traders begin to see diminishing returns in terms of speed from improved technology, how will Advantage Futures be able to set themselves apart from their competitors? “Technology is the whole package. It’s not just speed – you have to take into account connectivity, disaster recovery, access to markets, support, and most important, customized solutions that make sense for traders,” responds Nirmal Patel. “Advantage Futures is very well positioned to meet the technology needs of clients for years to come. Our collaborative approach with clients, vendors and exchanges really puts us at the forefront of any new developments. As long as we continue to offer the best possible technology solutions to our clients, Advantage and our clients will always have a competitive advantage over other firms who have chosen not to emphasize technology.”
Is server colocation right for you? What locations make the most sense for your trading? Do you have the right hardware configuration to maximize the benefits of server colocation? Do you have software on your computer that is slowing down your trading? How much is a millisecond worth to your profitability? The Advantage Futures technology team is ready to help answer all of your questions – contact them today at ContactUs@advantagefutures.com/afdev.
