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. No ISV or Primary Dealer platform other than GX2 in the marketplace today offers guaranteed, decimalized, cross-venue, streaming spread pricing.
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.
David Jaberg
President & CEO
David Jaberg is the President & CEO of both GX2 Systems and its wholly owned broker-dealer subsidiary, GX2 Spread Markets. David began in the financial industry as a runner on the Chicago Board of Trade. He now has over thirty years of experience in proprietary trading focusing on relative value treasury yield curve trading, statistical arbitrage, and market making. David, more recently, has focused on leading projects that integrate the vast possibilities of technology with the objective of increasing the profitability of trade. In 2013, Dave was a founder of GX2 Systems, a FinTech firm which combines proprietary technology and tightly controlled principal risk taking to provide relative value spread execution to clients free of leg execution uncertainty.
In addition, David completed his PhD in Economics in 2015 from the University of Illinois at Chicago.
Jason Nazarof
Chief Technology Officer
Jason Nazarof has over twenty years in the technology industry with almost all of them in the financial world. As the Quality Assurance Architect of the Chicago Stock Exchange, Jason cut his teeth designing testing solutions for Y2K, decimalization and Regulation NMS. Jason moved on to Breakwater Trading, LLC where he eventually took the role of Director of Application Development and used his experience with the trading community as he assumed responsibility of the design and implementation of Breakwater’s trading user interfaces.
As a founder and Chief Technology Officer at GX2 Systems, Jason brings his industry experience as well as his love for technology to the team in the hopes of setting GX2 a cut above other trading solutions providers.
Anton Kryukov
Senior Developer
Anton Kryukov studied optical engineering in Moscow, Russia. He then received his PhD in physics from Northwestern University. Anton continued to pursue his penchant for computing, automation, and fancy words by developing embedded software for medical and automotive devices. Anton joined Breakwater Trading as a software developer in 2003 and applied his talents to creating market connectivity components, order processing systems, and trading strategies. At GX2 Systems he continues to strive to utilize his experience to develop innovative strategies and trading systems. Although tremendously talented, Anton plays the guitar begrudgingly and sparingly.
Clivens LaGuerre
Senior Developer
Clivens LaGuerre studied computer science at NIU where he received his bachelor’s degree. Later in his career, he attended Georgia Institute of Technology where he received his Master’s Degree in Computer Science (Machine Learning Specialization). Clivens joined the trading side of business as a software engineer in 2008 and has contributed more than 18 years of technology experience to the engineering, implementation and management of RTPL, the GX2 middle and back-office risk platform application offering. He prides himself as a problem solver and looks for opportunities to add value and unique perspective to many challenges. Besides his passion for technology, Clivens enjoys other activities such as running the Chicago Marathon (twice) and most recently joining a Karate Gym as a way to keep in physical shape.
Locations
GX2 Systems, LLC
190 S. LaSalle St.,Suite 1950
Chicago, IL 60603
(312) 471-6300
info@gx2systems.com