Speed or sophistication? RTS sees market priorities shifting


RTS has just launched a new verision of RTD Tango QUANT, catch up with CRO Steffen Gemuenden. He describes a market enviroment where many trading firms are beefing up their analytical capabilities rather than focusing purely on speed



Q: You've just released a new version of RTD Tango QUANT. What are some of the industry trends you see driving demand?

Steffen: Basically with RTD Tango QUANT we are focusing more on quantitative traders who design their own trading strategies and want to optimise and analyse them against historical data. It's more a low-frequency trading algo product versus our RTD Tango product, which is a low-latency, high-frequency product. With Tango QUANT, demand we are seeing is more from people who study market behaviour, looking for trading signals. And I think one of the unique features is the back-testing and different optimisation techniques. Once you run your strategies, the product also includes the execution of those strategies. This can be done through our own OMS system or through other brokers that customers have deployed. One of the new things with Tango QUANT version 2.0 is that we also interface with Interactive Brokers, so customers can open up accounts with Interactive Brokers and reach basically all markets that Interactive Brokers offers from their desktop.

Q: You mentioned this is geared towards lower-frequency trading, which fits in with what the Automated Trader survey is showing. Is that feedback that you've been hearing as well?

Steffen: That's obviously the direction this product is taking. But we still offer, with RTD Tango, the low-latency, high-frequency product as well. So our customers are in both areas. The high-frequency space obviously has become very competitive, so our customers are looking for other solutions than just building trading strategies based on being the fastest out there. 

Q: Are there any geographical trends you're seeing, where customers are more focused on one product versus the other?

Steffen: I would say that for the low-latency, high-frequency business, we still see a tremendous focus in Asia. I think the Asian markets are what I would call 'in development', and are catching up with what we've seen over many, many years in the US and Europe. So we see a large demand for low-latency, high-frequency solutions in Asian exchanges and we see a lot of demand for it in China, with the Chinese markets slowly opening up.

Q: The decision to work with Interactive Brokers, was there any reason you chose them? And will you be looking to add other broker connections?

Steffen: We chose Interactive Brokers basically on client demand. For a lot of those quantitative traders, the last millisecond or microsecond is not so important to them. What's more important is global reach, maybe going through one broker where they can trade many different markets in Europe, the US and Asia. Going forward, the product can be pretty much connected to any other order management system, so we have seen demand from clients to connect to some of the investment banks or prime brokerage systems.

What we see, in terms of where this product is going, is that there's a lot happening around post trade analytics, portfolio analysis. How profitable has my trading been, how can I optimise strategies? That is more quant-based and mathematical model-based than the low-latency, high-frequency space.

Q: What's next, what are the priority areas of focus going forward?

Steffen: In terms of Tango QUANT I think most of our focus is around execution, supporting different execution platforms. But we also are looking at ways for customers to import historical data. For this kind of trading, good historical data is essential to really optimise your strategies, so we're focusing first on the execution part, second on real-time data and third on sources for historical market data. We see two different areas of algo trading now: one which is majority based on speed, versus one which is based on more on analytics.

Q: And the balance you'd say is moving more towards the analytics side?

Steffen: Yes, I would say that. The low-latency, high-frequency space is very competitive. And it's becoming more and more expensive for customers to do that. So they're looking for other opportunities to trade new markets. They may not have been trading in Asia before, and setting up their own infrastructure, their own DMA, can be too expensive for most in the market. So they would rather look at a lower-frequency strategy where they can reach many, many markets.

RTS delivers high-performance trading solutions and services across asset classes to elite financial institutions worldwide.  We are one of the world's top providers of low-latency, high-frequency, robust algorithmic trading solutions.