GX2 SYSTEMS
GX2 Systems, LLC has designed and developed the platform internally by our elite team of engineers, architects and financial market structure experts. The GX2 solution suite has been adopted and embraced by a growing number and diverse array of Primary Dealers, Regional Broker-dealers, Hedge Funds and Professional Trading Firms.
EXMODE
- GX2 is a system for executing spreads of multiproduct, customized, relative value spread relationships that are executed precisely at the limit price of the spread level, always in balance, and never legged.
- GX2 is built on a state-of-the-art technology foundation but it is not a traditional ISV. GX2 is a platform comprised of a trading desk, execution algorithms and risk management.
- The company’s world-class trading platform allows users to receive quality, actionable prices on customized spreads, baskets, or strategies. With GX2, users no longer have to worry about colocation costs, infrastructure costs and escalating technology headaches.
- Cross-venue, cross-asset class spreading functionality.
- Fully customizable tickets.
- Easy to manage limit order book.
- Friendly and flexible user interface.
- Server-based, collocated execution performance accessed through a thin client trading GUI.
- GX2 allows end-users to focus on what matters most; alpha generation.
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THE PROBLEM
GX2 owes its beginnings to a proprietary trading firm that used a traditional predicated spreader to execute automated trading strategies. The firm had difficulty running these automated strategies profitably due to a lack of back test accuracy, tracking error and incomplete fills such as getting “legged” during execution. Getting legged occurs during spread execution when certain instruments in a spread are filled at the target price but one or more other instruments are not. Getting legged introduces directional market risk that is not a part of the trader’s strategy. A better tool for spread execution was required.
THE SOLUTION
In order to solve this problem, GX2 was created. GX2 uses algorithms to generate theoretical fair markets in the underlying instruments of a spread. From these prices, the system generates fills to traders that are always in balance; never “legged” and never away from the spread order level. Once the fill is delivered to the trader, the system inherits the execution risk and proceeds to execute against existing inventory or the aggregated marketplace using automated trading strategies to optimally fill each individual leg over varying time frames. By managing the system’s inventory with highly optimized, tick sensitive, relatively short-term automated strategies, GX2 controls its market risk with a great effectiveness. As a result, GX2 can create streaming, actionable bid and ask markets for any custom spread relationship. An executed spread is delivered to the client trader once the trader’s order price meets this indicative market.
Client traders can create a custom trading ticket to reflect the risk profile that they desire without the numerous steps needed in the past to both build into and exit from relative value positions. When the true cost of execution is factored in, accounting for slippage and a trader’s time and effort managing legs, GX2 will meet and exceed the performance of other ISV spreading platforms while providing a much better user experience. Many factors contribute to creating this advantage: colocation with exchanges, maintaining low latency connectivity, proprietary price feed handlers, a logical GUI, and efficient order gateways. Most important is our continual incremental improvement and optimization effort for the execution algorithm layer which makes all of this possible.
THE BENEFITS
This leads to the true strength of the system which we feel lies in providing the client trader better, more flexible tools. GX2 lowers the cost of execution. Trader testimonials suggest that the overall cost of execution is reduced by 40% over traditional spreaders. In yield curve relationships, GX2 presents bid/ask spreads that are up to 60% tighter than those shown on more traditional platforms.
THE MARKET
GX2’s target customer is one who is actively involved in the markets, trades strategies/spreads, trades frequently, and has been fatigued by the investment of time and money on technology to reduce slippage.
THE COMPETITION
GX2 Systems, LLC holds a United States Patent: System, Method and Apparatus For Creating and Executing Inter-Exchange Spread Instruments. GX2 Systems, LLC, assignee. Patent US 8341059 B1. 25 Dec. 2012.
RTPL
- Provides a real-time consolidated view of positions and individual fills across multiple exchanges and ECNs, trading platforms, prime brokers and FCMs.
- Provides all accounting, middle office and back office functionality from exchange drop copy to the general ledger of the firm.
- Provides reconciliation of transactions between the trading systems of multiple ISVs, the exchanges and ECNs, and the prime brokers and FCMs.
- Exacting ability to manage commissions, fees and rebates per instrument, per trader, per exchange.
- Available via corporate intranet or over the web through compatible browsers. RTPL uses the highest level of SSL encryption for data transport.
- Ability to create internal, individual trader statements.
- Microsoft Excel plugin to access RTPL information in a spreadsheet for further custom calculations.
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THE PROBLEMS
THE FIRM’S PROBLEM
To provide an executive summary of the firm’s risk and profitability quickly and easily.
THE RISK MANAGER’S PROBLEM
To monitor trader’s positions individually, by instrument, by group, and across the firm. Need to produce and display real-time risk metrics such as VaR or expected shortfall.
THE TRADER’S PROBLEM
To monitor his or her trades, positions, and P&L in real-time. The need to see historical fills, real-time risk metrics, and calculate custom metrics on-the-fly.
THE OPERATIONS DEPARTMENT’S PROBLEM
Quick, accurate reconciliation of positions, fees, rebates, and the general ledger.
THE SOLUTION
GX2 has developed RTPL as a solution to the problems presented above. RTPL provides real-time trade information by collecting drop copies from exchanges and ECNs and presents them to the appropriate users, along with a market data feed used to calculate P&L. In the event that trades are not done electronically, RTPL provides a manual entry facility.
Risk calculations begin at the firm level and can be filtered down to group, trader, individual trading account (moniker), and strategy level. Further breakdown by asset class, instrument, and additional bespoke risk metrics are accessible and easily monitored. The system has an integrated reconciliation engine to reconcile fills between internal trading platforms and external exchange or OTC counterparty fill confirmations.
RTPL uses trade data along with configurable fee/rebate rates to generate daily individual trader statement. RTPL provides end-of-day reporting and reconciliation at the firm level for external exchanges, internal matching or OTC counterparties based on trade and financial data provided by the Prime Broker or FCM. These reports can be generated on a firm, trading group or individual trader basis. The reports readily available include: Day/Month/Year P/L By Firm, Group or Trader, Cash And Margin Report, Compare P&L by product – Int vs Ext (Futures, Securities, Equities), Detailed Trade Blotter, Repo finance reporting, Regulatory Capital Usage, Internal allocation of Volume Charges and many others.
THE BENEFITS
RTPL allows the user to see a complete view of daily trade activity in one view to better manage risk at the trader, trader group or firm level. An intuitive web user interface allows users to customize RTPL’s user configuration, fee/rebate management, risk metric management to fit their specific needs.
Further, built-in risk metrics, the ability to create dynamic trader groups and the ability to stream data to Microsoft Excel provide a flexible solution not available from the industry’s legacy products.
Locations
GX2 Systems, LLC
190 S. LaSalle St.,Suite 1950
Chicago, IL 60603
(312) 471-6300
info@gx2systems.com