Iowa Grain Launches Internet-based Commodities Trading Front End

Chicago-based Iowa Grain Company has rolled out its new OAK system for Internet order entry of exchange-traded futures and options. The futures commission merchant released the browser-based OAK system in July and currently has approximately 60 offices and 200 retail end users on the system. The modular system is comprised of three pieces that can be customized to fit the users' needs. Iowa Grain touts the system's enhanced security features and scalability.

"Our original plan was to go out and buy someone else's order entry system to service our commodity customers," says Scott Eisner, executive vice president of Iowa Grain. "A lot of the older systems we looked at were designed for one purpose and then modified to do new things, but none really met our goals, so we decided to write our own." Eisner adds that after looking at many of the other systems available, they were able to design a system to fit the needs of Iowa Grain users.

The OAK system is comprised of three tiers, according to John Walls, chief information officer of Iowa Grain and primary architect of OAK, that can be mixed and matched as needed by the user. "The Internet-based front end is completely separate for inputting, checking and canceling orders," says Walls. "The middle tier is all of the business logic and risk analysis-such as can this guy trade, how much can he trade, what are his limits, who is allowed to see orders that he has placed and which commodities and contracts are available on which exchanges." Walls explains that the last tier is a queuing system that routes orders to different exchanges, with additional API's written for each. Currently the OAK system routes orders into TOPS, the Chicago Board of Trade and Chicago Mercantile Exchange's system, but Iowa Grain expects to add Eurex communication in the future.

"On the front end we wanted to make sure people don't make errors, we designed it really to protect people from themselves," notes Walls. "We said, what's been working down on the floor for all these years is the actual order ticket with the buy side and the sell side, so we're going with that model." Security features included in this model, says Walls, are "little things like when you choose a buy order, all of the text on the screen changes to blue. A sell order changes to red." As orders are put in, the background color of the screen changes with different quantity levels and tone warnings alert users to abnormal quantity levels. "So if you're typically a one lot or twenty lot trader, you'll see something different as you change quantities," adds Walls.

"We heard all the horror stories that other firms were going through-the guy who leaned on a key board and bought ten thousand shares of stock," says Walls, noting that the OAK system avoids that possibility by placing buttons for execution and confirmation on separate sides of the screen. The OAK system runs on Netscape Explorer 3.0 or higher and delivers orders to Electronic Clerk, CUBS devices in the pit, TOPS ticket printers and Globex for E-Mini's at the Chicago futures exchanges. According to Eisner OAK is also integrated with Iowa Grain's back office systems, for real-time position and account view.

As for future OAK system plans, Eisner says, "One of our intentions is looking for additional APIs so that we could form a loose strategic partnership with a global FCM or investment bank and private label a version for that purpose."