Trading Technologies (TT) is rolling out a new platform called Echo Chamber, which allows individual firms and groups of firms to see aggregated and anonymized order data in real time from more than 55 exchanges. At its core, Echo Chamber combines futures contracts traded on different exchanges to provide a single view of each, no matter where the contract is traded.

“We are not aggregating look-alike or similar market data feeds into one—that’s a practice that we’ve done for many, many years,” Rick Lane, chairman and CEO of TT, tells WatersTechnology. “What we’re doing here is we are taking all of the order flow that TT platform clients are trading, and before that order gets to the exchange, we are essentially echoing that order back as a book update. So we are creating a TT-only view into these publically-traded, exchange-listed derivatives that solves a couple of problems.”

At the top of that list of problems is the cost of market data, Lane says, as Echo Chamber gives firms an alternative market data source. He says that while TT clients represent a “significant portion” of lit liquidity at any given time on a particular exchange—“on many exchanges, in certain products, we are north of 10, 20, 30% of the volume traded”—they have to pay a significant price (upward of seven figures) to consume the market data that they are, in effect, helping to create.

“What TT is looking to do is take advantage of our scale and our client base—our distribution—and the fact that this now sits on top of a technology platform that can aggregate across 55-plus exchanges all of the global order flow that’s happening in real time,” he says. “This creates a TT-specific market data feed based on that order flow that they can consume in addition to, or in lieu of, the exchange-provided market data feed.”

While the Echo Chamber market data view will not be as exact as a direct feed from the exchange, Lane says that it will be close enough for a trader to work with for their secondary and tertiary markets that they trade on.

“If it’s your primary market that you’re trading and you need to see every last quantity and book update, chances are the Echo feed won’t be sufficient,” Lane says. But if a trader just wants to know where a particular secondary market is at that moment, this feed will suffice, and as a result, they don’t have to pay the exchange fee to receive that feed.

“Or maybe you’re feeding this market data feed into your own risk models where they really just need to know: ‘What was the last traded price, and what’s the inside bid and offer,’—all of these things, you pay the same amount for them [to the exchange],” Lane says. “So there’s a host of opportunities where someone could start to leverage the TT Echo feed to both save some money and [improve latency]. There is a tremendous latency advantage to being on-network and being on the TT platform.”

To that last point, Lane notes that firms who are on the TT platform, which is delivered using a software-as-a-service model, will see the orders live in the Echo feed before the exchange has had time to acknowledge the order.

“The longer it takes the exchange to acknowledge an order, the greater the advantages to anyone sitting on-platform,” he says. “While everybody else is waiting for the exchange to acknowledge, everyone on the TT platform has already seen that book update milliseconds in advance, essentially.”

The Opt-in Process

Firms will have to opt-in to have their order flow contribute to the Echo Chamber feed, and therein represents the first challenge for TT: convince clients to contribute their order flow “to the greater good,” Lane says, to create a robust, fully aggregated-and-anonymized datafeed.

To start, TT is actively seeking out early-stage adopters; once a critical mass is hit—Lane hopes by the end of this year—and the feed becomes more generally available, they’re not sure how the opt-in process will work: whether on an order-by-order basis, or a firm-by-firm or trader-by-trader basis.

Today, the vendor is engaged with “a handful of clients” that have large trading floors, sometimes trading the same asset class or product, where Echo Chamber provides a firm-wide view of order flow in real time. The next step will be for two or more firms that trade similar contracts or asset classes to pull their flow data together and create an aggregated book of the firms’ activities.

The final stage—which will be dependent on how the market receives this type of capability, is to have a swath of firms that agree to have their order flow aggregated on Echo Chamber.

Because Echo Chamber is a free service—in fact, the company may look to offer commercial incentives in the future for participation, Lane says—Trading Technologies hopes they will reach a critical mass by enticing firms to cut their market data costs.

“Before we do that, though, we will have to make sure that the incentives that would have a firm wanting to contribute their order flow to the greater good are enough to outweigh any concerns they might have on contributing that order flow to us,” Lane says, adding that it will be impossible for clients to get front-run on Echo Chamber, as the data is completely anonymized and fully aggregated, so other firms on the feed can’t see who is trading what, where. 

With that said, Lane understands that an education process will have to take place in the beginning.

“The more people that want to contribute to Echo Chamber, the better this product will be, and the better the product is, we suspect and we hope that there will be more people who want to come and be on the network so they can reap the benefits,” Lane says. “Quite honestly, this initial coming-out party and announcement of Echo Chamber will be a first step toward gauging the industry temperature on something like this.”