Open source leads to trading success

Open source leads to trading success

on May 26, 14 • by Chris Bubinas • with No Comments

One online trading firm has seen tremendous success by leveraging open source trading tools...

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Open source software has become incredibly widespread over the past few years, used by a hugely diverse range of businesses in every sector. Yet there are still a number of areas where open source has yet to be fully embraced. One example of such an arena is securities and derivatives trading.

However, as InfoWorld contributor Eric Knorr recently highlighted, one online trading firm has bucked this trend, and it has seen tremendous success by using open source trading tools.

Open source success
Knorr reported that TradeMonster, now rated the No. 2 online broker by Barron's, was founded with the goal of leveraging Web-based open source solutions to empower non-professional traders. This marked a significant divergence from the securities and derivatives trading sector as a whole.

"Typically, [securities and derivatives trading] firms engage with top-tier consultancies and receive special treatment from big commercial software vendors, at costs that reflect the torrent of money flying through these systems," Knorr explained.

Such an approach was not compatible with TradeMonster's goals, so the organization turned to open source solutions instead. Speaking to the source, Sanjib Sahoo, TradeMonster's CTO, explained that the decision to pursue open source options was due not just to financial considerations, but also the software's flexibility. Sahoo wanted to be able to start from scratch, creating a platform that could receive ongoing upgrades and which the organization's staff would have complete control over.

To this end, the firm ultimately implemented code from more than 50 different open source projects, the source noted.

Greater flexibility
One of the key advantages offered by TradeMonster's commitment to open source was greater flexibility. Specifically, Sahoo noted that the introduction and rapid rise of Apple's iPad posed a problem for the company's reputation for offering an anywhere, anytime trading platform. The firm's software was based on Flash, which was not compatible with the iPad.

TradeMonster was able to respond to this development by shifting its focus to HTML5 and JavaScript with frameworks including jQuery, RequireJS and others, the source reported. While a challenge, the firm managed to match the richness of its Flash apps.

Sahoo noted that over the past five years, TradeMonster has achieved a 99.99 percent average uptime.

"The work of Sahoo and his team is a triumph of open source," the writer concluded.

Proper precautions necessary
While TradeMonster's experience demonstrates the potential of open source solutions for securities and derivatives trading platforms, it is also important to note that there are numerous challenges that organizations must overcome to reach such a level of success. Perhaps most notable is the question of data security. Obviously, compliance and other legal issues come to the forefront for these and other financial firms.

Organizations looking to leverage open source software must make sure that they abide by all relevant data protection laws. Considering that the software in question must be stitched together for the specific industry focus, this can be a challenge.

With a slightly different focus, this issue was recently highlighted by The Wall Street Journal. The news source reported that many companies' IT departments are dealing with a range of open source security issues, including a recently discovered vulnerability in OAuth 2.0 and OpenID.

"Nobody is in charge when it comes to open source, and the same applies with patching," said Gary McGraw, CTO of a security firm, according to the news source. "The fact of the matter is that open source is very pervasive, but it's not equally secure or reliable everywhere."

To combat these problems, businesses using open source must invest in high-grade tools and craft robust strategies designed to search for, identify and patch flaws before they become major problems.

Learn more
• Learn how to evaluate your current open source strategy and identify improvements by watching this webinar
• See how a financial services company used OpenLogic to resolve a critical open source issue right before a major launch

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