The future of TT

Runningbear · Aug 12, 2005

Quote from rufus_4000:

TT will probably continue to do well if they innovate, but their market share will probably shrink as the futures trading market becomes more fragmented.

I have observing TT for over 5 years now, but I have never *used* it for trading. Compared to other futures front-ends, TT is the leader, FFastFill becomes an ASP, GL is shrinking, Pats is focused on low-end customers, R&N is focused on brokerage firms, EasyScreen is/was still struggling with new feature / product issues. EccoWare is gaining traction but targeting floor traders mostly.

So, for professional electronic traders, at this moment, TT is leading. However, Niches are forming quickly, Strategy Runner is like "robot trading in a box", RTS and ORC are biting away at the Futures Options segment, EccoWare for floor traders.

A few trends in futures (these sounds like predications ... ) that I believe have high probabilities of becoming true:

* Higher percentage of trades will be from automated systems. Futures might hit NYSE like numbers (50%+ volume are programs) soon. Conversely, the percentage of trades inputed manually will probably eventually drop.
* Traders will want to trade more complex instruments, especially investment banks. Say, cross product / exchange spreads.
* Blurring of lines, today TT is a good "order entry" system, it is not an integrated system, why can't it do analytics? Why can't all order types be supported across all exchanges (Eurex, Liffe)? Anybody uses auto-spreader on TT on a regular basis? Don't you wish you can change its behavior easily?

Whether TT can innovate to satisfy vastly different market segments remains to be seen. Arcade type of environments have been enormously successful in the last 4-5 years, and constitute a large percentage of TT users. Will Arcade continue to succeed? Or will they start be bought / merged (obviously Mac comes to mind)? When they get to a certain size, the incentive to get control over software (say, in-house) gets greater.

I had head of a well-known prop firm say, "I *Hate* TT, but I tried everything else, and they all suck more", he then proceeded to spend the next 15 mins trying to convince anybody (including me) to develop an alternative.

On the other hand, TT product cycle is getting longer, the FIX Gateway took a lot longer to get out than expected. The Super Guardian is still very little used, etc. TT is a smart company, Harris, Bob Slezak and Farley all really know what they are doing, too bad that Russ, whom I really liked, went over to the customer side. Fact is that it is now a "mature" company, and the only way to continue their growth is to smartly diversify into new products while hold on to existing users.

TT is probably worth between 400M to 700M these days (an incredible feat, since I believe their rev is only between 80 - 100M, this is 5-7x rev! Whereas firms like DirectAccess, Sonic, etc, only got 3-4x). Harris will figure out a way to extract maximum value, he always does. I always suspected that TT won't go after the Exchanges (although in typical Blumfeld style, he bluffed first), but want a psychological advantage over the other ISVs. This is smart, it doesn't matter how much the other ISVs pay in the "partner program", be it $1 or $1M, but then when a firm choses a front-end to use, TT would pull out the "partner program" agreement, and wave "Look! We are the original and the real thing, these other guys are just copies and also-rans" .... Sorry for rambling ... and long ...
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Good post rufus_4000

Runningbear

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The future of TT

Runningbear