low latency trading in Chicago

Discussion in 'Prop Firms' started by thisguy, Jul 18, 2007.

  1. thisguy


    Would appreciate hearing about the low latency trading groups in Chicago.

    A friend left GETCO and wants to trade fixed income. He needs to set up an arrangement with a prop group or a low latency brokerage group with high connectivity to various exchanges (i.e. typical CME fills around 30ms or under).

    He's told me about the following:

    Breakwater (merger with Peak6 dead?)
    Sun Trading
    Speed Trading

    He mentioned there might be some former Hull guys around running smaller, under the radar shops.

    For you NYC-area guys, prop firms in Chicago aren't pure arcades or strictly places with a 50%/50% or 80%/20% split and a desk fee.

    Would appreciate any posts about firms you might know about. I'm also interested in knowing more about these types of firms.

  2. I think RCG is in the low-latency, fixed income space, as well as Citadel.

    BTW, last I heard is that Breakwater/P6 deal was back on.
  3. thisguy


    Heard unimpressive comments about RCG. Only newer middle ware was supposed to be up earlier this year, and didn't sound like they supported dedicated lines to ECNs to get access to best bid/best offer/insider markets. No in house trades developed purely for automated trading or algorithmic execution as of late last fall.

    Desk fees aren't high for Chicago (were $500/month) but if technology isn't good may not be much better than trading from home via DSL or Comcast broadband. They have an Evanston office, I've heard, but probably the same situation with maybe a slightly smaller desk fee.

    More like a basic NYC arcade than a Chicago prop shop focusing on technology and strong trader support.

    Any thoughts on RCG or other places?

  4. There is a lot. And Globex fills of around 30ms is pretty avg, actually sounds a little high, I should know, I am a Merc member, heh.

    These are the ones I know of, and notes:

    Speed Trading, now that RedSky is bought by ITG, not sure if they are still independent?

    QuietLight, they are mostly not automated trading.

    Spot Trading, Rob Merriless, hehe.

    Allston, not sure if they do Prop type of deal.

    There are a few more that either usually don't do prop deals, or slipped my mind.

  5. thisguy


    My friend had talked with the Red Sky people in the past about using their connectivity but not sure where that went. He said they were pretty good. Didn't know Red Sky was sold. Have met Brett and Stef, the partners who started it all as Speed maybe 7-8 years back. Weird since Speed needs this technology for options execution that they would let an outside firm decide technology direction which wouldn't support their trading desk. Will have to ask my contact there how things are going.

    Didn't think any options-only prop trading firms had high connectivity outside of old Hull and Citadel. You mentioned Spot Trading/Rob Merrilees. Are they trading low latency? Heard they've grown a bunch since 2004.

    I heard QL was really just to support Halston and his futures trading, not really with any other focus. They are very under the radar on the internet when they were once more visible under their previous name.

    My read on Allston wasn't great. Visited with someone and got a bad feeling when talking with senior people. My read on their BlackboxLLC group was as a way to try to get access to someone elses strategy they would execute, and then back out the strategy. Someone I know (friend of a friend) got the bums rush out of there and, he's no slouch and known for being quite professional at his previous positions.

    Heard 30ms CME fills is reasonable on days when markets are active but not crazy. 12ms is the fastets consistent fill I've heard, but this is when trading is quiet. Have you heard better consistent fill times? Also, at one time I was told eCBOT was filling in the 100ms - 120ms range. Has it improved? It may not be an issue if everything gets moved to Globex after merger. Breakwater people I'm sure have a great handle on these fill times...

    Oh, how does the merger affect the CME full, non-clearing membership? Does the CME member/member firm with this license still get the same (GREAT) deal on fees for all CBOT markets, as well? Or does one have to upgrade seat or get stock?

    Appreciate your insight, Rufus, and everyone else.

  6. thisguy


    Feel free to PM me if you want to answer or offer insight without posting to the wider public.

    I'm eager to learn but happy to keep certain details quiet.

  7. In terms of RedSky, yeah I met Brent and Stef quite a few times, last about 2 years ago. Brent and Stef cashed out, they hired Fitzsimmons to spruce it up for the sale.

    There are quite a few more trading firms around chicago that have low latency connectivity. Wolverine, DRW (still mostly futures), Tradelink, just to name a few. And well, me, but I am not in their class. Wolverine spent 6M for their data center alone.

    Yeah, Rob Merrilees is being his usual self, basically all over the place. They are not just high freq / low-latency trading, but they do some.

    QL is still mostly Halston, but they have branched out to other stuff, SSF being a notable one. They have started having automated trading in the last year or so.

    Allston has changed a lot, Harada is no longer there. When he was there, it was a quite bit of a revolving door. I have heard that they have settled down a bit now. Robert Jordan can be weird at times, but he is a good guy. I was never impressed with Blackbox ppl, I have met all of them, I think their technology is 2nd rate. They have some talented ppl, but the arrogance far outpace their capabilities.

    The party line from CME Group (artist formerly known as CME+CBOT) is that there is no change in membership privileges. But recently the CME seats are being bid up to all-time highs (full seat at 1.3M! insane), indicating that a lot of buyers (and if you read through the purchaser list, it is ibanks) believe there will be some kind of membership privilege extended to CME members.

    My personal guess is that for the next 12 months there won't be a change in seat rights, with CME/CBOT busy getting rid of CME floor, and eCBOT/LIFFE. They will try to merge some membership categories, with the stock purchases necessary, there are just too many classes (8?) with the combined entity.

    My experience with eCBOT/LIFFE hasn't been good. It is easy to code to, but the reliability and the degree of control just isn't there. Globex did a wonderful job with the MDP / MDAPI migration, now the high-end auto trading entities can toy with things like custom network stacks (not just at the server) and routing to get a small edge. Fun for the whole family.

    It seems like we know the same crowds. If anyone is interested in discussion in private, send me a PM, I don't check ET often.

  8. thisguy


    Rufus, thanks. I appreciate your insight into the business.

    I still consider myself pretty junior even though I've been in the business since 2001.

    Will send you a PM. Would love to get together for a drink and talk shop. It's possible we already know each other offsite, but it does sound like we know a lot of the same people.