As we’ve been building out LO:TECH over the last 18 months, several times we’ve been challenged with a question that has the following flavour: “If you’re building out such a great high-frequency trading firm, why are you bothering with other business lines, such as market data or trade analytics, or execution algos?”.
It’s a good question. Bring a laser focus to one thing and do it better than any of your competitors. This is the received wisdom in much of the start-up world. And it makes sense. Building a business from scratch is hard enough, without hamstringing your efforts by spreading your limited resources too thinly, trying to do too much. So, is that what we’re doing at LO:TECH, spreading ourselves too thin?
No. Not one bit.
Our laser focus at LO:TECH is on building lightening fast, best-in-class, crypto trading infrastructure. As a founding team we’ve been at this for over three years - building, using in production, refining, building some more. And it’s from this infrastructure that everything else flows. Each of the business lines we offer to clients are natural extensions of the already existent trading infra. Want a high quality market data service? We already ingest, normalise, use and store 100’s of gigabytes crypto market data a day in our production trading system. A client needs high quality, multi-venue execution algos? Guess what our proprietary liquidity provision strategies are built from. Need a crypto specific best execution and trade analytics suite? Already core to how we tune and improve our production trading strategies. It all exists within our trading infrastructure already, and exposing in-demand elements for use by clients is a relatively small engineering lift.
When we explain our approach like this, as natural extensions of already existing infrastructure, then we usually get “light-bulb” moments from those asking the original question. And it’s cool to see them get it; why would you not want to buy the actual detailed market data that a trading firm actually uses in production? Why use execution algos built by a software provider when you can use the ones engineered by an HFT? They see the synergies and value proposition.
So, that’s the framework in which we explain “Why we built yet another market data service”. But leaving it there is a little disingenuous. Particularly in relation to market data. Of all the ancillary trading services we offer, market data is the one we would most likely have built regardless of whether we had all the trading infrastructure pieces in place already.
As it stands, members of the LO:TECH team have previously bought and used crypto market data from almost all of the existing major market data vendors out there. Given what we do, this has usually been for micro-structure research purposes, and sometimes to feed live into a trading system or simulation engine. And to a person, this has been a frustrating and painful experience. Whether it’s been missing ticks, poor update frequency (’live’ order books every 5 seconds - no thanks!), or simply wrong data, we’ve found problems with almost all of the major vendors. It’s particularly bad when trying to use their order book data - the collection and building of which needs particular care (see: Why Every Tick Matters).
Now, don’t get me wrong - some of these other market data services have merits; great historical depth and breadth of coverage being one, nice, well documented APIs being another. So it’s not all bad. But if you need granular, tick-level data for research or live trading then each of them comes up short in one way or another. And it makes sense why - these businesses aren’t incentivised in the same way as a trading firm to ensure their data is correct all the time. If they miss a few ticks, it’s possible no one will notice; if LO:TECH misses a few ticks the firm might lose a bunch of money.
So, really, LO:TECH didn't set out to build yet another market data service. We built the market data service we wished existed when we were on the other side of the fence. It's a natural extension of our core trading infrastructure, delivering the quality and reliability we demand for our own operations.
If you're tired of missing ticks, slow updates, or just plain wrong data, maybe it's time for a change. Curious about what trader-grade market data could do for your research or trading? Drop us a line at [email protected]. We'd be happy to chat about our live and historical market data service, and how it might fit your needs.
