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Joe Duffy wrote:
To help "nonsense" from fact, here are some facts....
TOPS really has nothing to do with electronic trading per se in the way that
Globex2 or the FIX API do.
I repliy: ***** You are mixing apples and oranges here. Globex2 is a trading
engine. FIX API is a pipe/language standard to route to the trading engine.
TOPS is a routing system which connects to a different pipe/language standard
(TOPS Globex2 Gateway) to get to Globex2. TOPS has a lot to do with
electronic trading. It is a means for many traders to access electronic
and/or open outcry markets. It is the pre-eminent way that Retail orders are
routed to Globex2 AND open outcry markets.
TOPS is the Trading Order Processing System owned jointly by the CME and
CBOT. It is a routing system for orders to all exchanges, of which the large
majority are open outcry. The order is called to the broker who then enters
it into the TOPS system and it is routed and fills are routed back
automatically.
**** Your description is not completely accurate. There are many Internet
trading platforms which route to TOPS. TOPS connects to trading floor
printers, CUBS2 units at the CME and Electronic Clerk terminals at the CBOT.
A trader need not ever talk to a broker when placing an order or retrieving a
fill, depending on the system being used and its performance.
It has in the past been able to connect to the FIX API for e-trading in the
nas mini and sp e-mini.
****** TOPS has never been connected to the FIX API for emini trading. There
is a Gateway from TOPS to Globex2 that was developed to facilitate emini
trading. TOPS handles a lot of volume that it need not necessarily handle
given some of the alternatives now available. The FIX API was introduced
partly to alleviate some of this volume. The FIX API is supposed to be the
connection from trading platforms to connect to three different routes:
Globex2, CUBS2 and TOPS. Right now however, the FIX API is really only being
used for connecting trading platforms to Globex2. No volume is being routed
to CUBS2 or TOPS from the FIX API. There are a couple of firms which have
done some testing connecting it to TOPS, but they don't use it. No one, to
my knowledge is even testing the CUBS2 connection.
However any firm not far behind the technology curve, has already switched
away from TOPS for access to the FIX API. In terms of e-trading, if a firm is
still using ORAPI (Order Routing API ) instead of FIX API they are behind the
technology curve.
***** This really depends on whether you are trading open outcry or
electronic markets and is a bit judgmental and biased towards the CME. How
about Eurex? Or LIFFE? How about the a/c/e? You can't access those markets
from the FIX API. And you can't access any U.S. open outcry markets from the
FIX. What you have is a mishmash of systems and interfaces and it really
depends on the markets someone wants to trade, their trading approach and the
things they value (speed or dependability). The FIX API is certainly faster
for eminis than TOPS. However, one firm who is connected to the FIX API (
and does the most FIX API volume) has all their open outcry orders print at
their order desk and they call them down to the floor. So, they are up to
date with their electronically matched orders and 5 years behind with the
open orders. I would agree the FIX API is the future, but it does not offer
the same degree of order management and support as does TOPS. This is a
value that many different firms have maintained despite the attractive speed
of the FIX API. There are larger issues that which is the fastest pipe.
There are issues like what is the best system to manage risk for the firm.
TOPS is known, dependable and offers tremendous order management that FIX API
does not. If a trader using LEO needs to change an order and LEO is down,
there are dozens of TOPS operators who can change or cancel that order. The
same trader, calling a firm accessing the markets via the FIX API and that
system is down, must change the order via a limited number of Globex2
machines, or they could cancel an order via Firmsoft on a limited number of
machines connected to the CME's networkd for that product.
The FIX API is exclusive to the CME and is specific to e-trading.
***** The FIX API is an industry standard API and used widely across the
securities industry for back office systems. The CME had used a slightly
different version to facilitate futures, but is shifting to a brand new
version which has futures compatibility built in.
It is an interface that allows brokerage firms or independant software
companies like PATS to access the CME electronic OM's (Order Managers). The
OM's hold all MIT and STOP orders until they are triggered. Unlike open
outcry markets they must be triggered by an actual trade, not just a bid or
ask price.
***** Stops are handled different by different ISV's (Independent Software
Vendors). PATS currently holds stops on the user's machine and they are
elected once a trade from the price feed received shows at the price. I
don't know how MIT orders are handled. And it is important to not confuse
the exchange servers of an ISV with the Order Manager Server of the CME.
Orders sent through TOPS are stored on the TOPS OM, NOT the FIX API
OM. Where it gets tricky, and where you really need someone from the CME
to tell you, and I am not sure they would, is that each firm has one or more
servers that store that firms order book for globex2. They all connect to the
actual trade execution platform. Where the tricky part is, is how each
server's
orders are executed as they are sent to the execution platform. Is one
server faster? Does checking the orders against prices to see if the stop is
executed take enough time that new market orders jump ahead of it? I
am not sure.
***** I am confused by your statements above. There is one Order Manager
Server or System from the CME. There are also servers at the FCM to access
the OM Servers or directly to Globex2 depending on how orders are being
routed, TOPS, FIX API, etc. Orders are not held by the firms servers, but
routed through them. All orders electronic orders, regardless if they were
sent to the CME through TOPS or the FIX API are databased in a product called
Firmsoft.
***** I agree this is confusing. Even some very bright people at the CME get
confused when trying to explain it, as it is very complicated.
Regards,
John J. Lothian
Disclcosure: Futures trading involves financial risk, lots of it! John J.
Lothian is the President of the Electronic Trading Division of The Price
Futures Group, Inc., an Introducing Broker.
And to be honest, I think its a red herring. Save a disaster of technology
malfunction, e-trading is nirvana compared to the pits. I use it extensively
everyday, and have never had a bad fill.
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