does IB/TMBR do any proprietary trading outside of MM activity, and to what degree is IB's study of customer black-box trading integrated into your MM algorithms? As a long-time IB customer running black boxes, I was less than thrilled to read that IB is aggressively collecting directional algorithms. Where do these fit into market making?
IB does not do any proprietary trading nor does it try to decipher what clients are doing. Timber Hill also does not price anything based upon client flow. Our current algorithms are used to price an integrate hundreds of thousands of products on a global basis. taking that into context, I think it is safe to assume that an algorithm designed to trade with 100K in cash would have any meaningful use to the ones Timber use to trade a multi-billion dollar global portfolio. There are a number of reasons why the clause was inserted into the rules. There is a fair amount of money at stake. Hopefully this competition will be an annual event. Without access to the code there is nothing to prevent someone passing his/her code to someone the following year. In addition, this is also an opportunity for an aspiring financial engineer to gain viability within a firm that may offer him a lucrative job/career. Winners in competitions like this normally are high risk reward strategies. But someone who writes solid code has a unique opportunity to put their work in front of a decision maker.