Sucden Financial elaborates on its STAR proprietary platform: Detailed interview with COO Gavin Parker
Proprietary platforms are a very poignant means of a prime brokerage, institutional liquidity provider or retail brokerage achieving several important objectives. Ranging from the ability to tailor the trading platform to suit specific purposes or clients, to providing a fully integrated trading environment with no need to rely on relationships with third party platform providers, […]
Proprietary platforms are a very poignant means of a prime brokerage, institutional liquidity provider or retail brokerage achieving several important objectives.
Ranging from the ability to tailor the trading platform to suit specific purposes or clients, to providing a fully integrated trading environment with no need to rely on relationships with third party platform providers, there are many functional reasons why firms go to the expense and through the lengthy research and development of designing their own platforms.
Differentiation by offering specific value propositions is key in today’s market, and this applies to institutional liquidity providers just as much as it does to brokers offering their services to retail clients.
Sucden Financial’s STAR platform is indeed a case in point, and in order to expand on the ethos behind the platform, FinanceFeeds spoke to Gavin Parker, the company’s Chief Operating Officer, who is highly experienced in leading technological developments within Sucden Financial’s global operations.
The new Dynamic Spreader functionality on Sucden Financial’s STAR trading platform now provides users with the facility to monitor and trade on two exchanges/markets simultaneously, taking advantage of any arbitrage opportunities. Do you consider STAR to have ventured into competition with independent software vendors (ISVs)?
The design of the Dynamic Spreader provides the ability for users to combine any two available markets and trade them at the same time, taking advantage of any relative value. What sets it apart are the advanced real time risk management features and anti-legging tactics, providing our STAR users with levels of safety and comfort that are second-to-none. The platform is also straightforward, easy to use and is a fraction of the cost of some ISV platforms with similar functionality. So yes we believe STAR provides very robust competition!
How was STAR initially developed, and what was the rationale behind its development considering that Sucden Financial provides liquidity to commodity firms and FX companies which use their own platforms?
Development of the STAR (Sucden Trading And Risk) platform began in 2001. This was driven by the desire to reduce costly licence fees, control risk and deliver on requirements for new trading features that the ISV eTrading systems did not have or could not provide quickly.
A feasibility study was undertaken into building our own system which would initially interface with the Liffe Connect platform.
The first version of STAR was designed and constructed in 3 months using Java and C++. The system was immediately used to manage Sucden Financial’s GTC order book for Liffe commodities and was quickly adopted by the Softs’ market making team, as Sucden Financial was a designated market maker for White Sugar at the time.
Within a year, enough features were added to STAR and the remaining ISV licences were cancelled. A FX feed and access to other markets such as the (then) IPE (International Petroleum Exchange) and LME (London Metal Exchange) followed soon after.
Today STAR provides access to thousands of tradeable contracts on key global markets, including CME Globex, ICE Futures Europe and ICE Futures US. The platform remains the primary futures and options execution system for our clients and internal teams.
What type of commercial customer use the STAR and how did Sucden Financial grow the futures and options side of its business via the proprietary platform?
Our users range from individual day traders to large corporates with whole teams using STAR all over the world. As open outcry trading declined, Sucden Financial was able to attract locals to the STAR platform as part of a cost effective execution and clearing package.
What do futures and options customers look for in a trading platform, and why is it important for firms to be able to provide adaptable solutions?
The key feature users require is stability. STAR was built from the ground up with a fault tolerant, self-healing distributed architecture to make it very stable and resistant to potential machine or network failures. Parts of the system can be repaired or upgraded with no interruption to customer service.
Speed, accuracy, ease of use and robust risk management features are also essential factors that attract and retain customers. They also like to see their specific requirements reflected in the platform, so wherever possible we try to incorporate these as new and improved features in STAR.
You have the advantage of being a software and infrastructure expert, which COOs of many companies in this sector are not. How has your expertise in this area benefited Sucden Financial’s operations?
I have worked for a number of independent software vendors and at banks, where a key focus was the development of electronic trading solutions for derivatives. My experience has helped Sucden Financial avoid some common development pitfalls and helped us focus on what clients will find useful.
Do you think that the proprietary trading desks of New York and Chicago could easily be replicated on the other side of the Atlantic via the STAR system?
Many of our clients, past and present are successful proprietary traders who have influenced STAR’s evolution in very positive ways, so it is an ideal platform for this purpose.
What additional functionality do you think users of proprietary options and futures platforms will need in the times ahead, and how does Sucden Financial have an edge over its rivals in terms of keeping pace with change?
STAR is certainly well placed for the future with its advanced price discovery and intelligent order types within the Dynamic Spreader. We have a busy programme of work prepared for 2016, but we are not at liberty to discuss this in any specifics at present. Watch this space!