IB acquires FutureTrade - Adds Institutional Grade Execution Platform

M

makloda

http://biz.yahoo.com/bw/071120/20071120005197.html?.v=1

Interactive Brokers Group Acquires FutureTrade
Tuesday November 20, 8:45 am ET
Adds to Capability of Servicing Hedge Funds in Order Execution, Management and Prime Brokerage

Press Release Source: Interactive Brokers Group

Interactive Brokers Group Acquires FutureTrade
Tuesday November 20, 8:45 am ET
Adds to Capability of Servicing Hedge Funds in Order Execution, Management and Prime Brokerage

GREENWICH, Conn.--(BUSINESS WIRE)--Interactive Brokers Group, a major automated global electronic broker today announced the execution of a Definitive Agreement to acquire FutureTrade Technologies and its wholly-owned subsidiary, FutureTrade Securities for an undisclosed amount of cash. FutureTrade is a leading provider of integrated electronic equity and option trading services. “This acquisition increases our ability to expand our services for the hedge fund and institutional community more rapidly,” said Thomas Peterffy, Chairman of Interactive Brokers Group. “We were specifically attracted to FutureTrade by its customer base of over 200 institutions, their 40 software developers and the technology they have developed over the past 5 years. We are building a full service organization for hedge funds including execution and prime brokerage services.”

“I am excited about joining Interactive Brokers and bringing the capabilities of FutureTrade and its team to servicing the hedge fund and institutional market,” said Murray Finebaum, President & CEO of FutureTrade. “Combining the worldwide reach and financial capabilities of Interactive Brokers with our track record of serving hedge fund and institutional investors will be a compelling offering in the market.”

More info on FutureTrade's platform: http://www.futuretrade.com/platform/platform.html

Anybody with any info on how/when this may become available to (institutional) IB customers? I guess this can take months depending on how much programming/integration work is necessary but maybe I am wrong?
 
Good..take all the newly acquired FutureTrade programmers and immediately have them build a new feed and platform for the rest of IB (and get rid of that damn "snapshot" kindergarten datafeed...lol). :D
 
Quote from makloda:



Anybody with any info on how/when this may become available to (institutional) IB customers? I guess this can take months depending on how much programming/integration work is necessary but maybe I am wrong? [/B]
More...

According to their webpage:

http://www.futuretrade.com/platform/multibroker.htm

you can have this integrated rather quickly. It is just a front end for multiple broker trading. Integrating with IB from a technology standpoint doesn't seem like it would be that big a deal, it is more about corporate culture integration.

The problem still arises over IB's own data access to their servers. It don't mean squat if their servers or the TWS feed keeps going down.
 
http://www.securitiesindustry.com/news/21743-1.html
November 21, 2007
John Hintze

In a bid to bolster its nascent prime brokerage business, Greenwich, Conn.-based Interactive Brokers Group (IB) is acquiring FutureTrade Technologies, a trading platform that caters to sizable hedge funds and other institutional customers, for an undisclosed amount of cash. The deal includes subsidiary FutureTrade Securities.

Thomas Peterffy, chairman and founder of Interactive Brokers, said he anticipates that Lake Forest, Calif.-based FutureTrade’s platform will be integrated with IB’s within four to six months. “We expect to be able to provide Interactive Brokers’ routing and execution technology to FutureTrade customers, including our options executions,” said Peterffy.

For FutureTrade’s 200 customers--which have an average of $200 million in assets under management--the deal will provide access to a much broader range of asset classes and geographical markets. FutureTrade offers trading in U.S. options and domestic and international equities, while IB also provides electronic trading access to non-U.S. options markets, futures, foreign exchange and fixed income on more than 70 exchanges and trading venues around the world, through a single account.

Interactive Brokers introduced prime brokerage services early this year, in preparation for the arrival of portfolio-margining accounts in April. The firm was one of 12 self-clearing broker-dealers initially approved to offer the accounts. Of the 2,000 such accounts opened by Sept. 30, IB had about 1,300, though its accounts were generally smaller than other brokers’.

Portfolio-margin accounts represented $58 billion in margin debt, of a total $380 billion, by July 31, though both numbers declined due to the market volatility this summer.

FutureTrade does not provide prime brokerage services to its customers, some of which manage billions of dollars in assets, according to Murray Finebaum, president and CEO of FutureTrade. However, the acquisition is based in part on its clients finding the firms’ integrated execution and clearing services attractive enough to switch over to IB for prime brokerage.

“The offering comes at a time when hedge funds want to trade globally to get alpha,” said Finebaum, who joined FutureTrade in 2001, three years after the firm started trading. Finebaum, whose Wall Street career includes stints as COO of Instinet and COO of the Chicago Mercantile Exchange’s Globex platform for Reuters, said FutureTrade and Interactive Brokers provide some overlapping services, but other services will be complimentary.

“We do a number of things that are uniquely suited to hedge funds’ workflow in terms of capturing trades, downloading them to prime brokers, and marking positions to market in real time,” said Finebaum. “Interactive Brokers also does a number of those things, but we do it specifically for hedge funds.” Finebaum will help integrate the firms’ trading platforms and build the prime brokerage business.

“The FutureTrade platform complements IB’s facilities and accordingly, when the two platforms are fully integrated, all facilities of both platforms will be available to all customers,” Peterffy said.

Interactive Brokers, which includes the Timber Hill market-making subsidiary, began brokerage operations in 1993. In May, the company sold 40 million shares of stock in an initial public offering, a 10 percent interest in the 500-person firm that in June executed 14 percent of the world’s equity options and 19 percent of U.S. options.
 
From what I saw Futuretrade's platform is native Windows, not Java. It sounds like they will offer both platforms (Java TWS and Windows Futuretrade) parallel to another but of course I might be completely wrong. Would love to hear first hand info from somebody with IB.
 
http://www.interactivebrokers.com/en/general/about/mediaRelations/11-29-07.php?ib_entity=llc

FutureTrade/Interactive Brokers Leaps to #1 Ranking for Hedge Fund Executions

With the recent agreement to purchase FutureTrade, Interactive Brokers has established itself as the #1 Ranked Broker for Hedge Fund Trade Executions based on the recent 2007 Alpha Magazine Technology Awards.

“The combination of FutureTrade’s global execution technology with Interactive Brokers’ portfolio margin, smart & combination order routing, reporting, clearing, and settlement technology makes us the industry standard for any hedge fund that has a need to electronically execute and clear trades” said Steven Sanders, SVP of Product Development.

Alpha Magazine, which is published by the Institutional Investor magazine, surveyed 300 hedge fund managers who collectively control $600 billion in assets, for its 2007 Top Technology Firms awards. FutureTrade faced tough competition from other software functionality providers including Banc of America Securities, Goldman Sachs & Co. and Bloomberg to clinch the overall award.

It is expected that FutureTrade and Interactive Brokers will fully integrate their technology platforms in the next four to six months. FutureTrade customers will benefit from Interactive Brokers features including:

* Order management and account access to stocks, options, futures, forex, and bonds on 70 market centers worldwide in one account
* 14.85% price improvement on marketable US Equity Options vs. an industry average of 0.57%*
* Real-time Portfolio Margin which allows increased leverage with greater safety
* EFPs which provide a market-determined financing alternative

Interactive Brokers clients will benefit from FutureTrade features including:

* Industry standard trade entry tools for the hedge fund industry
* Superior charting capability

Customers will not lose any of the features and benefits of their current broker’s technology platform. Over the coming months, clients can look forward to additional features provided by the combined platform.
 
It is nice to hear that. After or before IB and FutureTrade integration, I hope they can improve their automatic billing methods to support CTA, CPO, RIA, Friend and Family Advisors to become much CTA friendly billing system. I hope IB/ FutureTrade can support the following new options:

A. (NEW OPTION) Percentage of MONTHLY Positive P&L applied as of January, February, March, April, May, June, July, August Sept, October, November, Dec (enter MONTHLY percentage) ------------------------ NOTE: This option is based on MONTHLY (not quarterly) per CFTC/NFA regulations.

B. (NEW OPTION) Monthly/Quarterly Invoicing --- Your advisor calculates the Advisor Wrap Fees and removes the fees from your account up to a limit of ________ % (enter PERCENTAGE) per month OR ________ % (enter PERCENTAGE) per quarter. ----------------------------------- NOTE: This option is based on % (not based on absolute dollars amount) so that when client account equity increase, Advisor do NOT have to ask client for permission if the advisor fee is over the previous set dollars amount.


IB is an excellent FCM. I like it. If IB can enhance their automatically billing system by adding the above new options, it will become even much better FCM for CTA, CPO, RIA and Friend & Family Advisors.
 
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