Traders and Financial Insititutions Should Wake Up to FOSS Solutions

by Ostatic Staff - Jan. 22, 2009

A few days ago, Kristin wrote about Marketcetera's first full production release of its open source automated trading platform. Aimed at hedge fund managers, traders, brokers and dealers, the system is standardized, open, scalable and modular. Ars Technica also points out that over 20 financial institutions have already adopted Marketcetera. The question is: Why doesn't the financial community at large wake up to this kind of opportunity to reduce costs and customize trading through an open source offering?

As Ars Technica notes, it would be fairly easy for many financial institutions and traders to adopt the Marketcetera platform:

"The Marketcetera Trading Platform is built with Java and is designed to facilitate rapid deployment and ease of extension. It provides APIs and a JRuby scripting engine for extending it with additional functionality and specialized behaviors. The developers say that fairly complex trading strategies can be implemented with only a few lines of Ruby."

In our previous story, Kristin also points this out:

"Marketcetera uses MySQL out of the box (but is 'database agnostic' if necessary), and its Photon GUI was built using the Eclipse Framework."

In short, this trading platform is based on open APIs and can work with most common databases and tools already in place at financial institutions. Marketcetera has a Red Hat-like business model, where it seeks to get revenues from service and support for its platform. The cost of implementation is far below the cost for typical proprietary trading platforms currently in use.

That last fact I know from experience with traders. A few years back, I covered trading software for various technology publications, and I got to know quite a few traders. In many cases, the advantage they command in the financial markets comes from their trading systems, and all they need from software infrastructure is a reliable platform for trade execution, record keeping, and the like. It is not uncommon for large-scale traders to spend millions of dollars on custom software from specialist developers to meet these needs.

I'm positive that there are a lot of people in the financial community who could benefit from familiarizing themselves with Marketcetera. Marketcetera isn't the only open source option, either. Yesterday, Lisa covered Black Duck Software's citation of jbooktrader, found on Google code, as a top open source automated trading solution. It's a fully automated system that uses the Interactive Brokers API to allow traders to customize it and work with standards. Implementing it requires some programming, but not as much as building a costly trading platform from the ground up, which seems to continue to be the norm in the financial industry.