ADG is a proprietary trading, market making and investment management company with a strong record of profitability in trading with its own capital. This case study, based on an interview with ADG’s Head of Technology, describes why and how ADG uses Orc Tbricks to support their business.
Originally founded as a proprietary trading house, ADG takes an innovative approach in everything they do. Their business ranges from prop trading and market making to investment management, venture capital, client advice and brokerage.
ADG ranks as one of the top five liquidity providers for Bund options on Eurex. As a major market maker in exchanged traded options, ADG quotes prices to and seeks prices from, other market participants, facilitated by over 80 direct lines with investment banks and interdealers/brokers.
Proprietary trading is the pillar of ADG's business. Seeking dislocations across and within derivatives markets, their traders use techniques such as relative value strategies and dispersion trading. ADG's business relies heavily on advanced technology. In 2008, they realized that their trading system lacked the capacity to take their business further. ADG wanted to explore emerging business opportunities such as co-location but the older system's architecture could simply not support their changing business requirements. They set out searching for a robust, scalable platform that they could easily adapt to their own, unique flavor.
ADG scanned the market for a server-based system that would allow them to scale their business as neccessary, seize new business opportunities quickly and, perhaps most importantly, be prepared to make future changes down the line.
After considering several different systems, they found Orc Tbricks the best match to their requirements. They took it in and ran it in parallel with their old system for a few months before rolling it out to the desks one by one.
ADG's business now has the scalability, flexibility and performance it set out to achieve by changing systems. The company also finds huge benefits in Orc Tbricks distributed, app-based architecture and minimal bandwidth requirements. A recent example of the latter is ADG's new office in Dubai. A Dubai based team is now trading on the same exchanges as the London-based traders. From Dubai, they connect back to a data centre in the UK, then into the City of London and on to the exchanges from there. This is all done over a 10 Mbit/s connection. This kind of geographically distributed trading would simply not have been possible with a bandwidth-intensive system.
"Before you decide on a system, take a close look at it's architecture and back end. A distributed, server-based architecture provides unparalleled scalability and is well suited for co-location. Also make sure that you have the ability to make changes and add new functionality at your own pace. It is a major advantage if business logic is delivered as separate apps along with source code and development tools. This will ensure a high level of flexibility and help ensure a future-proof solution." -- Head of Technology, ADG
Market conditions have changed significantly since the financial crisis and the pace of technical innovation is high. Product development is an absolute necessity to remain competitive and for that, modern and agile technology is a prerequisite. Orc Tbricks has allowed Carnegie to significantly speed up the pace of innovation while reducing costs.