ECHO Platform Use Case

Automated Market Making for Custom Futures Spreads and Calendar Spreads with ECHO and CTS/T4 Integration

Objective

Our team was tasked with programming and automating various relative-value market-making strategies for a proprietary trading firm. These strategies needed to execute across intricate futures spreads and calendar spreads in various futures and futures options markets. A critical requirement was achieving low latency, with single-digit microsecond order updating, while ensuring that all working orders remained below exchange-imposed iLink transaction limits. Additionally, we needed to establish a robust API connection to the CTS/T4 front-end platform while ensuring efficient risk management and seamless order execution. To provide full oversight and control, we developed an intuitive user interface to manage the trading system. Leveraging our ECHO platform, we delivered a tailored solution to create and execute this advanced automated trading application.

Solution

Harnessing the full capabilities of the ECHO platform, we crafted a bespoke solution that seamlessly integrated with the CTS/T4 front-end platform and their API. Our team utilized ECHO's extensive feature set to automate the entire spectrum of market-making strategies employed while prioritizing risk management and user-friendly control. This provided our client with the means to trade complex futures spreads with precision while minimizing risk exposure.

Implementation

  • Low Latency, Microsecond Order Updating

    Leveraging our full backend capabilities of ECHO, we created a powerful trading solution for managing vast amounts of order update instructions across hundreds (potentially thousands) of working orders. All order updates were kept within exchange imposed iLink transaction limits quota, given intelligent design add-ons we built into the trading system.

  • Market Risk Management

    Effective risk management was at the core of our implementation. This included automated hedging for new positions, dynamic order adjustments based on market conditions, and provision for manual intervention to allow traders flexibility in real-time adjustments.

  • Technology Risk Management

    We implemented robust safeguards and a trading technology risk management messaging layer to manage technology-related risks effectively. This included continuous connectivity monitoring of the API connection to CTS/T4, automatic order handling in cases of disruptions, text/email alerting, and compliance and order management tools to adhere to Exchange-imposed messaging quotas and regulatory mandates.

  • User-Friendly Interface

    Our solution included a customized user interface designed to enhance the user experience. It featured tailored UI design for intuitive trade oversight, scalability and flexibility to cater to changing trading demands, program start/stop commands on demand, and easy order management.

Results

The seamless integration of ECHO with CTS/T4 culminated in the successful creation and deployment of a comprehensive automated trading application. This solution empowered our client to execute complex futures spreads with precision, automate risk management, and optimize market making performance. Leveraging ECHO's advanced trade engine features alongside a user-friendly interface, our solution facilitated efficient trade execution, real-time risk monitoring, and seamless order management. Our comprehensive toolset positioned our client to significantly scale up their trading operation.