MB Trading Futures - Introduction

Tschim - try again, I think Europe should be fine now.

Charlinks,

First of all – we have never added an unreliable bank. You make it sound like we just pick some mom and pop shop from across the street. The banks in our network are some of the largest banks in the world; I believe all of them are publicly traded. If you knew which bank this was, you would never make such a comment. The last thing they are is unreliable. In order to improve our execution and spreads we are always going to seek to add new providers, which will ultimately result in added benefits for our customers, which includes more liquidity obviously, but also other things that customers have been asking for. That doesn’t mean there won’t be some bumps along the way. So you’re aware, before any new provider is entered into our network we test all connectivity to ensure it’s good before ever putting it into live production, but that doesn’t mean there is a guarantee it’s going to go perfect as we all wish it would. The reality is that testing, demo, and live environments are totally different beasts, and until you turn on that live switch and end up in a situation where that bank is getting hit with a big piece of the order load, things that look perfect can still go wrong, and that doesn’t mean at all that it was at our end. Look at today, there is a widespread international ISP problem which is out of our control but affecting our customers overseas, particularly in Europe. So are we to blame for ISP issues in Europe now as well?

You said “But technologically you do not show that you have solid disaster recovery plans in place.” That is just a false statement. There is no backup solution once orders go awry technologically speaking. The major exchanges, NASDAQ, the stock ECNS…all have had order issues on occasion every year. They, like us, can’t just flip to a new server if the problem is one of their major players down their pipeline. Just as a note, they can’t magically solve ISP issues in Europe either.

With regards to a fix…we are reviewing the logs and have identified the issue with the bank. They are taking the steps on their end and it should be good going forward. If you’d like us to stop adding banks, please send me an e-mail and I’ll send that up the chain.

Thank you, I apologize if I crossed some lines in my post and thank you for correcting me.

But I think it would really help if you put together a document to help prepare your customers for events like that. Use real life examples and outline possible protections.

The only thing you can do is, if you are in a position, offset it with another broker. Apparently, even if it had been possible to get someone on the phone at MB, there was nothing they could do about it since the whole server was down.

That is easier said than done tho, because in a situation like that it is unclear if or when pending orders will be executed at the 'down' broker.

Hello Justin,
first I want to say "thank you" for the grat job you (and MB Trading) are doing here.

I tried the new navigator "alpha" and found it's new charting tool very useful.
But I saw there some bad huge spikes of more than 100 pips, like on NZD/USD for example, that no other broker/platform/charts shows.
Could you tell me if this is an "alpha" software issue or if those spikes are ordinary at MB Trading. I'm planning to fund my real account at MB Trading but I'm scared by those spikes.

Thank you.

Justin,

I thank you for you honest and curteous reply. I accept that it was a
software/bank issue and understand it was at a VERRY busy time.
If I have your assurance it was not a "broker ploy" and that you are taking
steps to improve things, then I am happy, thank you.

M

Hi Taulatin,

Thank you for the comments and support.

I am unaware of any spikes, but if you would like to screen shot them or document the times you saw them at, we can certainly look into it for you.

My suggestion would be to get as much detail about what you see and email [email protected].

moneylender,

I promise you it was not a broker ploy - that's not our business model and it never has been.

M,

Im glad that you phased this issue publicly. I think it should be addressed. I had previously spoken to justin on a seperate email. I have consulted a retired bank trader friend of mine and this is what he suggested.


I made 3 market orders to short the Euro 3 minutes after the nfp. All 3 were rejected.

I have some questions Justin,

1. What would have happened if i go long and euro moved 100pips against me. Would efx claim it? I have seen brokers do that, they hang but kept your orders until the market moves against them, the traders could do nothing.

2. Will this ever happen again. Lately i've been seeing spikes and now a hanging order route system. Its starting to spook me out.

3. For those already in a trade. How will you honour their orders that way? Alot were desperately trying to get out of positions when this happened, it would raise an immediete red flag.

Isnt this bank routing thing supposed to go beta on some other server first before you do it live?

best regards
jest

It's Friday 8:22 am (NY time) and I can't log in to the Navigator. Tried several times. Anyone else have this issue?

Jest1081 ~

A lot of this has been addressed either previously on these boards or even in my recent responses since the brief issue after NFP. However, I’m going to try to put a lot of it together in one place here to help people out.

First of all, I’m going to have to disagree with your retired bank trader. Let me start from scratch and demonstrate how our platform works.

We connect both directly and through various portals to a variety of liquidity pools and banks. Hedge funds, black boxes, and retail customers open accounts with us and trade through our system. All of those entities interact equally, meaning you can see all of the orders and prices from each. While our customer orders obviously come from internal servers (you guys sending to us), all of the liquidity pools, banks, and various pipelines are a totally different story. Obviously, the majority of the liquidity comes from these sources, thus tapping you directly into the Interbank market. So let me phrase it this way. Without our customers, without banks, without black boxes and funds (which are customers), and without the various pipelines that bring some of the banks to us…we don’t have a quote. Combining that information together in one place and having a technology piece, our MBTX routing system, to send thousands of orders at any one time to the best possible destination is what we do.

In other words, if you send a market order, MBTX should determine what the best price is at that time and under the circumstances and route that order there, starting with other customers showing on the ECN, because that is the fastest, closest solution, and then moving to major banks and liquidity destinations. If you send a limit order that is not yet executable (i.e. buying under the market, selling above the market), that order sits on the TDFX ECN for all to see, including yourself. If you send a stop order that is not yet executable (i.e. wanting to buy if the price moves up, wanting to sell if the price moves down), that order sits on a server that is monitoring price, which then waits for that price to hit and then routes the order out to the location that makes sense.

Now, beyond the fact that technology problems will occur from time to time, and we have plenty of redundancy, etc., on our end, what is in our control here and what isn’t? Actually, I’m sure you can tell what is in our control, so let me just list what isn’t. Your computer, your Internet connection, the routers on the Internet between you and us, the pipelines that compile some of the bank quotes that we use, the systems of the banks that we connect to directly, and various Internet factors between them and us. What is that similar to? That’s similar to a stock exchange, like the NASDAQ, or to a stock ECN, like ARCA and ISLD. So what happens when one of those things that isn’t in our control has an issue? Problems can ensue on various levels. Two examples. On Wednesday, an ISP in Europe had a router problem, and our customers in Europe and other areas of the world that routed through there were unable to maintain a connection to us. Our fault? Not at all. Our US customers were fine. Despite that, we worked very diligently with the ISP in Europe to help them pinpoint their problem, even though it affected everything about the Internet over there, not just us. The problem was resolved in a few hours. The other example, of course, was the issue that we had on NFP last Thursday. In that case, a new bank in our system, hit with heavy volume for the first time, caused a bunch of issues. Orders got stuck, the system was affected, etc.

Sound complicated? It is. One of our top priorities, without giving away specifics, is to bypass various existing technology pieces and have direct connections to as many banks as possible. In other words, right now, we have many banks that we connect to directly, but we have others that come via pools and pipelines. Many banks are now working to establish their own systems so they can directly connect to whomever they want. We are a proponent of as many of them doing that as possible, and then we want to connect to as many of them as possible.

Let me give you a hypothetical example. Let’s say that we had 4 pipelines with 5 banks each that connect to a total of 20 banks. If one of those pipelines goes down, we either lose access to the liquidity of those 5 banks, or depending on what exactly happened, some of our orders get jammed routing to the pipeline with the problem. On the other hand, if all 20 of those banks had direct connections to us, one connection going down would have a far smaller impact, perhaps almost none.

Now, if all of that sounds too complicated, how do you get around it? Two words: Deal Desk. It’s you and it’s them. That’s it. A lot of the complex technology is taken out of the mix. What does that mean? That means that you are now dependent almost exclusively on them. They give you a quote. They see all customer orders, they move their quotes around those orders. There is no price competition. BUT. If they have an issue, it’s on them. You can say “I had this order in the system at this price, you had a problem, you need to fill me.” And I would argue that in many cases, since they are providing that one-on-one connection, you’d be right.

But we don’t. We don’t trade against you. We don’t provide a price. We stand up for our technology, but we can’t speak to the pieces between you and us, nor can we guarantee the pieces downline from us to the liquidity providers. We are a forex broker that uses an ECN.

Now, I’m not aware of a single forex broker who hasn’t had at least one issue in the last few months. Technology is technology. On the whole, I’d say we’ve been exceptionally good. But different forex brokers have different models. Ours is easy. Push the technology envelope, encourage as many banks to adapt to the FIX-protocols as possible and show their liquidity one-on-one, grab that feed, and make it interact fairly with customer orders. In other words, we want as much in there as possible to provide the customer with the most liquidity. Then you have other firms that have been and still are happy with the deal desk model. Then you have other firms that are now trying to claim that they aren’t deal desks because they route the orders out of their operation, but they only use one bank that they work with exclusively, thus making them essentially a “deal desk team” with a “minimum” or “fixed” spread. And finally, you probably have some where the model is to just take a handful of banks with established connections so the work is already done. What does that last one achieve? Something similar to us, just with far less liquidity most of the time. So in other words, we may have been down for an hour or two this month, after that NFP number, but I would argue that the rest of the time, your orders probably had more places to go, and we’re constantly trying to increase that.

OK, with that said, let me answer your three questions directly.

1)What would have happened if I go long and euro moved 100 pips against me? Would efx claim it? I have seen brokers do that, they hang but kept your orders until the market moves against them, the traders could do nothing.

First, let me state that EFX doesn’t exist anymore, we’re MB Trading. Second, whether you have orders in the system, positions, etc., if we have a technology problem that takes down our system, all we can do is take your orders over the phone and manually place them against banks that are still up and running, assuming there are some. We are NEVER holding your orders intentionally or doing anything to prevent the facilitation of your execution. EVER.

2)Will this ever happen again? Lately, I’ve been seeing spikes and now a hanging order route system. It’s starting to spook me.

While I’d love to tell you that our systems will never ever experience even the slightest hiccup ever again, if you read the above, I think you understand. All major exchanges have technology issues and have been down at some point, even in the last year. As for “spikes,” that’s a whole different story and unrelated. Charting is a different deal. I keep an eye on our datafeed via e-Signal, and I don’t see any spikes. Please screenshot and e-mail reports of spikes and what charting package you are using.

3)For those already in a trade, how will you honour their orders that way? A lot were desperately trying to get out of positions when this happened, it would raise an immediate red flag.

If the problem was something in-house, we honour the trade. For example, on rare occasions, a customer order might get stuck somewhere in our system. We make good. If a system-wide issue occurs that is out of our control, then obviously, we cannot do that.

Which leads to:

4)Isn’t this bank routing thing supposed to go beta on some other server first before you do it live?

As previously answered in another post…all banks must meet vigorous testing criteria to become FIX-compliant. We then go through our own process with them internally. This bank had actually been operating fine with us for a period of time, but the NFP number was the first point where that much volume went through the system. You can’t Beta test fake volume.

At some level, technology is a piece of the risk of trading. I can only say this. I used to work for EFX, and we had a very good understanding of the MB system. I now work for MB Trading directly, and having seen it better and closer, I can honestly say that we do not play games and do everything in our power to provide our customers with access to the most liquidity and the best pricing available, but there are technology risks that come with that in a market that is still developing. You have to weigh those risks and decide whether you lean toward, on one extreme, brokers who must be held accountable but aren’t giving you the best pricing and in fact subject you to much manipulation or, on the other extreme, someone who is trying to give you as much access as possible to various destinations.

[quote=jleblang;2105091]Jest1081 ~

A lot of this has been addressed either previously on these boards or even in my recent responses since the brief issue after NFP. However, I’m going to try to put a lot of it together in one place here to help people out.

First of all, I’m going to have to disagree with your retired bank trader. Let me start from scratch and demonstrate how our platform works.

We connect both directly and through various portals to a variety of liquidity pools and banks. Hedge funds, black boxes, and retail customers open accounts with us and trade through our system. All of those entities interact equally, meaning you can see all of the orders and prices from each. While our customer orders obviously come from internal servers (you guys sending to us), all of the liquidity pools, banks, and various pipelines are a totally different story. Obviously, the majority of the liquidity comes from these sources, thus tapping you directly into the Interbank market. So let me phrase it this way. Without our customers, without banks, without black boxes and funds (which are customers), and without the various pipelines that bring some of the banks to us…we don’t have a quote. Combining that information together in one place and having a technology piece, our MBTX routing system, to send thousands of orders at any one time to the best possible destination is what we do.

In other words, if you send a market order, MBTX should determine what the best price is at that time and under the circumstances and route that order there, starting with other customers showing on the ECN, because that is the fastest, closest solution, and then moving to major banks and liquidity destinations. You forgot the number one reason why you do it, its the cheapest solution and most profitable solution for MB Trading!

[quote=fxtrader42;2105132] Orders are held at TDFX, which matches off the trades. I don't see why you would want us to route to a slower execution or a worse price to avoid orders on their servers.

Justin,
Do you care to tease us with any more news on the historical data project? Is it still "coming soon"?

Thanks

If you install a new version of MBT navigator, you can already have charts and historical data

You said the only thing you can do is take orders over the phone, why then when that problem happened where you not answering you phones for 45 minutes?

Also you did not answer the first question at all. If a person wants to exit a position and he can't log into your platform and you are not answering your phones what the hell is he gonna do to prevent further damage to his account.

Quote:
"Other example, of course, was the issue that we had on NFP last Thursday. In that case, a new bank in our system, hit with heavy volume for the first time, caused a bunch of issues. Orders got stuck, the system was affected, etc.:

HOW EXACTLY DOES A BANK GET HIT WITH HEAVY VOLUME FOR THE FIRST TIME?

are you expecting us to believe that a bank did not test their software for weaknesses and potential problems? A bank that deals with millions of dollars was somehow hit for the very first time with heavy volume and it just crashed. Were the software designers absolute morons as to not foretell possible bottleneck problems. This is a bank that deals with people's money not some video game. Every software before put on the market is vigorously tested for problems. Don't tell me u can't test volume
that is a lie. It's an electronic system and all electronic systems can be tested to their limits.

No one is blaming you for isp problems or some router that went out in europe or anything like that. What people want to know is why u were no where to be found when this happened.

Quote:
"nor can we guarantee the pieces downline from us to the liquidity providers"

so what can you guarantee?

Start by answering the first question directly. What happens when the customers can't reach u over the phone and they have orders that need to be closed?

Thanks DB I will try that!

I want to drive NinjaTrader with the MB data. I have used it in the past but the downside was always the lack of historical data to fill in the gaps from when I was not on line. I would use Gain to backfill but of course they only go back 24 hours themselves. I also found MB historical tick data (that I had stored over time my self) would be dramatically changed by using Gain tick data to update it.

Just tested Ninja and I will have to wait I guess to try it out tomorrow when the MB servers are back online. Ninja refuses to connect to just the historcal data it seems.

Thanks again!

That's funny, how can a system-wide issue be out of your control, if it is YOUR system? You are making it sound as if it was the new banks fault, it however sounds like *your* system failed to disconnect the misbehaving bank, and *your* support people failed to answer the phones.

these answers by MB are very ambiguous at best.

I read that EFX does not exist anymore and that it's now MB Trading. I have a question (that no doubt has been asked, but I could not find it).

EFX was working on a product called "remote trader". Has that product now been scrapped? I was waiting for it to come on for demo trading because I can't use Navigator at work due to the firewall and also I believe that it has integrated charts unlike Navigator.

Thank you.