2008 InfoWorld CTO 25: Greg Framke, ETrade Financial

SOA and some juggling make possible the company's international expansion in just seven months

 

ETrade Financial helped pioneer the business of consumer stock and fund trading, once the province of brokers. But since online trading became commonplace, Americans have focused on U.S. securities, limited to accessing higher-return global companies indirectly through mutual funds and American depository receipts, which only half of the large, investment-grade foreign companies had bothered to set up. On an increasingly global corporate playing field, ETrade thought it could make trading stocks of foreign companies as easy as trading U.S. ones.

So in January 2007, the company asked CIO Greg Framke to make it happen. By August, ETrade customers could trade in six countries -- Canada, the U.K., France, Germany, Japan, and Hong Kong -- using U.S. currency.

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Launching its global trading platform so quickly was made partly possible by good circumstances. ETrade had previously bought a small exchange brokerage that had seats in six foreign stock markets. That was key because only seat holders have the right to trade stocks; without a seat, ETrade would have had to go through local brokerages at higher cost and less control, Framke says.

But having direct access to the exchanges merely laid the groundwork for getting into the business. Framke actually had to build the trading platform, integrating ETrade's settlement system with those of the six stock markets and handling the currency conversion from customers' U.S. dollars to the local currencies, as well as bringing in research from new sources. Plus, the platform had to be built with an eye on supporting the executive management's ultimate goal: facilitating trades across every one of the world's 42 bourses.

ETrade's U.S. trading platform had been developed under SOA principles. That meant that Framke's team could use many existing services, such as those tracking settlement status and customer accounts, while also more easily adding new services specific to the global markets, such as currency conversion. The U.S. platform hadn't been designed for global expansion -- "I would like to claim 100 percent foresight, of course," he says with a grin, but he does take credit for a good SOA implementation that kept the U.S. platform flexible and extensible for unknown future needs. "If you're right more often than not, you'll end up with a platform that's pretty flexible." Another result: "It wasn't that costly to extend the platform," he says.

Good circumstances also helped Framke get the foreign-exchange system built more easily: The main architect of the trading platform (dubbed T++) had previous experience in other international currency platforms, so he could more quickly design and implement one for ETrade. "That was a big help," Framke says.

But expanding to stock markets around the world introduced another challenge. As a U.S.-only business, ETrade's settlement platform could easily handle the flow of settlement activity after the markets closed and be ready well before the next day's batch of settlements came in. (Settlement involves moving the money and reconciling the changes in ownership, as well as preparing regulatory reports.) But with trades now occurring in multiple time zones, there wasn't enough time to handle all the settlements in the old window, Framke notes.

Framke's team solved that problem by using a few techniques. One was boosting server capacity to process batches faster, such as through supporting more parallel streams, so the U.S. and European batches would not overlap, yet still begin right after their market closes. But the Asian settlement window couldn't be finessed that way, so ETrade ended up storing the settlement data in its trading platform until a window later opened up. Framke calls this approach a "middle office" that keeps out of the way of both the back-office settlement processing and the front-office trade transaction processing. "It was really an operations challenge," he says.

Galen Gruman is executive editor of InfoWorld.