In a new TABB Group research report released today, âFutures Trading Platforms: The Evolution of Point-and-Click Trading,â trading-system vendors are delivering innovative technologies and functionalities geared specifically to the needs of the new breed of futures traders to meet this demand. âIn todayâs futures markets, traders are more likely to have a degree in information engineering from MIT than 10 years of experience in the pits of Chicago,â writes Andy Nybo, senior research analyst and report author. âDemand for sophisticated functionality leveraging the capability of the futures market structure will continue unabated, coming from all sides of the market, from the largest market makers and hedge funds, to the independent trader.â
As the futures markets become increasingly complex, market structure, trading strategies and investor participation are all under radical transformation, explains Nybo, and what was once a regionalized market for locals has evolved into a dynamic trading bazaar worldwide. âToday, a trader in Chicago is as likely to be trading futures on the Dubai Mercantile Exchange as he is on the Intercontinental Exchange in the U.S.â
With the âarms raceâ to provide new and innovative tools for traders growing more competitive, functionality once the proprietary domain of secretive futures firms and market makers has been adapted for the everyday user. According to TABB Group, which estimates that there are more than 30,000 third-party vendor screens in use today across the future industry and generating $200 million in annual screen revenues for the leading vendors, front-end trading systems from an expanding number of vendors now allow firms to quickly build and implement strategies, essentially acting as âon-demand,â quantitative model-development programs.
Today, multiple vendors offer screens with similar functionality, providing access to a handful of markets for as little as $500 a month. However, says Nybo, who in April of this year wrote the firmâs industry study, âExchange-Traded Equity Derivatives: the Buy-sideâs Increasing Exposure,â âthe cost rapidly ratchets up to as much as $3,000 a month once more sophisticated features are added.â But, he adds, âAs is typical in the brokerage industry, high-volume accounts pushing significant order flow through the system often qualify for âfreeâ access.â
Based on conversations with professionals representing futures operations at investment banks, hedge funds, investment managers, exchanges and trading platform vendors, the 20-page report with seven exhibits also examines functionalities provided by todayâs trading systems and provides insight into spending trends for technology that enables traders to operate in todayâs trading environment.