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I met Joseph
Ahearn twenty years ago, in the days when he was
reading Thomas Merton mingled with books on artificial
intelligence. He was also taking his CPA exam. He was
clearly more interested in Merton’s philosophical
writings and even then he was fascinated with computer
technology. I remember thinking how crazy it was to
use a personal computer when a typewriter was much easier
to understand! I learned recently that he had created
TradingScreen and thought it would be an opportunity
for Optionetics readers to learn more about a system
that has revolutionized the way traders interact with
multiple exchanges, brokers and markets over the Internet.
Joseph Ahearn is a Co-Founder, Chief Technology Officer
and a Director of TradingScreen Inc. From 1995 to March
2000, as a Director at Credit Suisse First Boston and
responsible for Front Office E-Commerce Trading Application
Development, Joe was leading the development of Internet-based
applications. At CSFB, he designed, developed and managed
electronic trading systems for all major financial markets
and functioned as chief technology officer of CSFB's
PrimeWorld family of e-commerce financial products.
In this capacity he was responsible for product development,
architecture design, technical infrastructure and project
management, and was instrumental in the building and
implementation of exchange links with European electronic
exchanges.
From 1987 to 1995, Joe managed CSFB's Equity Technology
group in Tokyo, which built program-trading applications
and electronic exchange connections to all major markets
in Japan, and established the first Straight Through
Processing engine—from trader to clearing agent—in
the Japanese market. Prior to his assignment in Japan
(from 1984 to 1987), Joe developed personal computer-based
financial analysis tools for CSFB.
Prior to joining CSFB (from 1982 to 1984), Joe was
employed by PaineWebber as an internal systems specialist.
Optionetics: Could
you briefly describe what Trading Screen is and why
you conceived it?
Joseph Ahearn: While
running the Fixed Income e-commerce technology group
at CSFB, I became aware of the huge disparity of services
that brokers were offering their institutional clients:
none of them could offer trading access across multiple
brokers.
TradingScreen's system is designed to provide the infrastructure
that enables institutional investors to trade major
financial products, around the clock, on any market,
with a wide range of counterparties. TradingScreen has
created a global trading network for all players—a
network that significantly reduces proprietary IT expenditures
while rationalizing the number of connections required
by the investment management community. As a result,
TradingScreen provides a unique cooperative platform
for both the Buy-Side and Sell-Side, which brings unprecedented
distribution, efficiency, simplicity and transparency
to the execution and clearing process for financial
transactions.
Optionetics: TradingScreen
is for institutional traders but do you envision creating
a similar system for individual traders, or are there
difficulties for serving this market with your type
of product and service?
Joseph Ahearn: Though
our 2003 objectives do not include targeting the individual
traders’ segment, several of the planned 2003 enhancements
of TradingScreen will address the needs of this group.
Primarily, they need an order management system [OMS],
which interacts with their trading decisions and executions.
The scope, speed and depth of the TradingScreen services
will allow us to extend to this segment of the market
quite nicely.
Optionetics: The
industry has gone back and forth about whether online
trading will eventually eliminate traditional brokers.
Can online trading go farther from E-Trade's innovations
over the Internet for the general trading public?
Joseph Ahearn: There
is no turning back. As the exchanges and other pools
of liquidity go electronic, they become more transparent.
Without the old filters of information by traditional
brokers, the volume and velocity of information gets
turned up. The demand for articulate and smart analytic
tools will become great. The provision over the Web
of access to and information on the markets is expected;
now the challenge is to tame this information and package
it in a manner that complements the trader's decision
process.
Optionetics: You
began your company around the top of the Internet bubble.
What were the challenges and do you have any major competitors?
Joseph Ahearn: The timing
was good for two reasons: we were able to attract enough
seed money to get our three global offices off the ground,
and the sudden downswing gave us some breathing space
from competitors to spend the extra time to understand
and apply proper design patterns and trading models
that would survive the initial product release. This
has enabled us to build out the system with confidence.
Whereas we expected the markets to pick up sooner than
they have, the extended downturn has caused institutional
brokers to take an extra hard look at TradingScreen's
value proposition and the benefits to servicing their
clients.
Our competitors come in different shapes. There are
several who compete with each of our services, but few
who package them all together the way TradingScreen
does.
Optionetics: You
spent several years in Japan. My understanding is that
part of the problem with the economy in Japan is the
internal mark-up price by a few insiders, which stops
healthy competition. What was your experience when you
were there?
Joseph Ahearn: This was
the case when I worked there from 1987 through 1995.
There were so many middle men who had to make a living
that prices for the quality goods were unmovable. In
addition, there was a “polite” competition,
which frowned on discounting products; they competed
on “features,” but not on price. From my last
visit there in September, this latter aspect of the
market has had the biggest change. There is a very healthy
price competition going on, and it is beginning to change
many tangible aspects of the society; some good, some
tough to swallow.
Optionetics: Japan's
economy appears to have improved over the past couple
of months but in general it would appear to still be
severely handicapped by how much ground its stock market
has lost over the past two years. TradingScreen
does business in Japan. How do you see your business
growing in the present Japanese climate?
Joseph Ahearn: Our greatest
asset has been our ability to bring trading access to
the largest brokers in Japan. When we initially conceived
TradingScreen, we included an office in Japan because
we wanted our development to be organic, so that each
of the peculiarities of the Asian markets would be addressed.
The stagnant market, there, has prevented many technology
projects from blossoming within Japan. I have witnessed
several competitors change their focus, or abandon their
initiatives altogether. As the markets pick up there,
TradingScreen's existing access will be quite valuable
Optionetics: The
American economy has delayed the evolution of new technology
over the past two years, or has it? In your view do
you think the falling economy has hurt the growth of
technology, and if so do you have a sense of whether
we are recovering?
Joseph Ahearn: The falling
economy has strengthened the growth of technology, because
only the solid projects are getting built. There was
a lot of bad technology, which siphoned off investment
money during the hey-days. And unfortunately there was
some good technology developed and released with an
unnecessarily high burn-rate. Some ideas were brilliant
but could not outlive poor resource management. In this
downturn, the best technology ideas are attracting the
best money and the best people as well. This economy
is good for ideas that would have been overlooked during
the mad scramble in the late ‘90s. This economy
has also forced technology companies to adhere to basic
ROI principles, which in turn has silenced the flashy
but flimsy technology. Because there are good projects
appearing in some domains, it means that we are recovering.
Optionetics: What
is the best approach for investors to take when considering
investing in a start up company, especially if it's
going to be long haul investment?
Joseph Ahearn: Caution
and common sense are essential. Simple ideas are always
the best. The start-up's solution must meet a logical,
existing need, and not be dependent upon a future outcome.
Customer allegiance is human nature. Therefore service
models are nice because they maintain revenue streams
that you can count on. The team must have solid experience
in the company's domain.
Shelley Souza
Senior Writer & Trading Strategist
Optionetics.com ~ Your Options Education Site
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