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In the coming months there will be a transition of online trading systems
from the ORAPI (TOPS Order Routing API) to the FIX API and EUREX API.
Additionally, some systems will be hooked up to the LIFFE and other
electronic exchanges, but that is a whole other story.
This change is not just about the technology and interfaces upgrading or
evolving. It is also about the cumulative knowledge of the people supporting
TOPS based systems being replaced by people trying to learn the new order
management tools and systems.
Many of the support people who have been trained on the menu driven DOS-like
TOPS will need to adjust to dealing with Windows -like functionality. Some
of these people will have to be replaced with people with greater
technological know-how. However, some of these tech-oriented people may not
have the market skills and market problem solving intuition that their
predecessors had. These tradeoffs will take time to work themselves out.
In the meantime, customers will suffer as a consequence in many cases. Many
of the problems the early adopters experienced with customer service from
learning-on-the-job brokerage clerks and help desk personnel will be
revisited by the second wave of online futures traders.
The second wave is also likely to be less technologically savvy as the more
tech oriented early adopters. Thus, this second wave of traders, the
doctors, dentists, and lawyers, etc, who want to trade futures online are
facing new technology risks and slower support.
There is no doubt the technology needs to be upgraded and improved. The CBOT
leadership has come under fire for agreeing to a deal with EUREX, which the
critics say is not even the most technologically advanced system. That is
now, when the deal was initiated, some of those systems people are pointing
to were still on the drawing board.
With the adoption of the FIX API, some online systems will be experiencing a
Graphical User Interface overhaul. What you are looking at on the screen
will be changing and evolving. The FIX API includes a price feed for the
electronically traded markets at the CME including a look at the book, i.e.
top bids and offers and size. Some traders will insist on having this
information on the same page and interface as their order entry screen, while
others will be content to have that information delivered by traditional
stand alone quote package. The market will decide which interface
functionality is the best. The only certain thing is there is change to what
you are looking at and the number of markets you will have to trade.
It will take some time to work through this transition. My online trading
operation and I are just as vulnerable to some of these issues as the next
firm. I do think we need to pay greater attention to each and every order
during this time, assume nothing and double and triple check everything. I
would encourage online traders to do the same.
Regards,
John J. Lothian
Disclosure: Futures trading involves financial risk, lots of it!
Disclosure: John J. Lothian is the President of the Electronic Trading
Division of The Price Futures Group, Inc., an Introducing Broker.
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