The Gateway to Algorithmic and Automated Trading

At home in the City of Big Shoulders: XR Trading's Matt Haraburda

Published in Automated Trader Magazine Issue 28 Q1 2013

From the floor of the world's oldest futures and options exchange to a high-rise, high-speed trading firm, Matt Haraburda has watched electronic trading come of age. Automated Trader caught up with the head of Chicago-based XR Trading and got to ask him about the challenges of taking on new asset classes, the possibility of volumes returning and what he thinks are the most interesting markets to trade.

Matt Haraburda, XR Trading

Matt Haraburda, XR Trading

AT: We'll start with how you got your start in financial markets.

Matt: I started my career very early, while I was working my way through school, working for the Chicago Board of Trade. I was fortunate enough to get involved in the earliest days of electronic trading here in Chicago, and fortunate enough to be involved in some high-profile projects, the biggest being the a/c/e partnership (Alliance/CBOT/Eurex) with CBOT and Eurex. I had a short foray with an ISV (independent software vendor) that provided software for the trading industry, and then after that went to work directly for Deutsche Börse, primarily supporting the CBOT-Eurex alliance.

AT: So you have very much an exchange background.

Matt: Absolutely.

AT: How do you think that informs your work at XR? Does it give you a different take than some other people who might have gone straight to a trading firm, bank or brokerage?

Matt: For one thing, working for any exchange is really a wonderful opportunity. You get exposure to a tremendous variety of market participants, from the retail investor all the way up to the very largest money managers. You gain a perspective of the business that you typically wouldn't get, working just for proprietary trading firms.

And they tend to be larger organisations than your typical trading firm. So just from a corporate operating business acumen standpoint, you tend to learn quite a bit too. I wouldn't go back at this point, but I've certainly learned a lot working in those environments.

AT: As far as XR goes, if you had to describe the firm's philosophy, what would it be?

Matt: We see ourselves as mostly market makers, sometimes market takers or arbitrageurs. We believe in the use of technology that provides tremendous value to the market place, creates efficiencies in transferring information and bringing costs down. To a large extent it's the typical 'Why is high frequency trading good?' article. It's something we truly believe in.

AT: So can you tell us a little about the history and focus for the firm?

Matt: XR started in 2002. We're mostly a futures shop, but we do cash Treasuries, cash FX, cash equities and equity options. We definitely have a large focus on interest rates here. We also trade commodities, agricultural products, energy, metals, stock indexes.

AT: You do a lot. Has it always been that way or did you start in one area and branch out?

Matt: For the most part, we started as a fixed income shop and branched out from there.

“We see ourselves as mostly market makers, sometimes market takers or arbitrageurs. We believe in the use of technology that provides tremendous value to the market place, creates efficiencies in transferring information and bringing costs down.

"We see ourselves as mostly market makers, sometimes market takers or arbitrageurs. We believe in the use of technology that provides tremendous value to the market place, creates efficiencies in transferring information and bringing costs down."

AT: What do you see as some of the issues, when you do want to go from one asset class to another?

Matt: Often it's just as much, and sometimes more, of a challenge to adapt to different venues or market models than necessarily what's commonly thought of as an asset class.

AT: Such as trading in Russia or Brazil?

Matt: No, like comparing the market structure of the futures markets with, say, the market structure of the US equity markets. US equities are very fragmented - dark pools, a lot of internalisation, a tremendous variety of order types and interesting regulation regarding NBBO and Reg NMS - whereas when trading an equity future, we're talking about the same asset class but it's a very different experience.

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