DECLARATION OF JAMES J. ZELLINGER
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`1. James I. Zellinger, declare that:
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`I am persoually familiar with the facts set forth herein, and, if called as-a witness,
`l.
`[could and would testify thereto of my own personal knowledge.
`I began my career as a
`2.
`I have over 40 years experience in the financial industry.
`runner in the mailro°m at the Chicago Board of Trade working for Merrill Lynch.
`I
`werked in variOus positions at Merrill Lynch for 13-14 years. I left Merrill Lynch to be a
`partner and part-owner in Hennessy & Associates where I was involved in operations and
`sales. Hennessy Was a clearing firm. I worked there for around 13-14 years. During my
`years at Merrill and Hennessy I traded throagh an order desk. When I left Hennessy. I
`traded for a while both from an office and on the floor of the CBO'I‘.
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`In around 1990, I was doing consulting work on the Globex project for the
`3.
`Chicago MerCantile Exchange (“CME”) when it was first being built. Globex was the
`CME’s electronic trading platform. In 1990-91. I took ajob with the CME to run
`operations for Globex. Iran operations for Globex until 1994.
`In 1994, I returned to
`Merrill Lynch to run the commercial trading office. After working at Merrill for one and
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`the traders used a variety ofdifferent systems, including the Project A front-end, the
`Globex front-end, Trading Technologies (“TI”) software. EasyScreen software and GL
`software. We also used Espeed software to trade on Espced‘s cash bond market. I was
`also aware ofother front—end systems, including software offered by Patsystems. When I
`left, Transmarket had over 100 traders trading electronically.
`4.
`I first saw TT‘s MD Trader in around the fall of 2000. It became immediately
`apparent that MD Trader was a superior trading tool to the other systems available at the
`time. The reason I know that MD Trader was superior was that the traders insisted they
`have it. We licensed TT's software to get MD Trader despite the fact that it was
`significantly more expensive than the compctiu'on. I recall the CFO of Transmarket at
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`TRADING TECH EXHIBIT 2046
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`TD Ameritrade v. Trading Technologies
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`CBM2014—00133
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`because we were having some technical difficulty on our CME cennection and were not
`able to get the TT software up and running quick enough.
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`At the time, the preexisting screens were not designed for an actiVe trader. MD
`5.
`Trader was the first application designed to be used as a true trading tool by the trader to .
`enhance trading. The preexisting systems were order book type screens that were built so
`that a broker order desk could keep control. of its orders and to limit errors. MD Trader
`was far superior for the active trader because it was fast. It improved the way the trader
`saw the market. This was especially true for spreaders who would put multiple markets '
`up side by side. MD Trader allowed the traders to easily see the movement of the market ‘
`because the market data was displayed dynamically relative to fixed prices on the screen
`so that the data would move up and down on the screen. The preexisting screens
`displayed the best bid and best ask prices in designated locations on the screen (typically
`side by side) such that when the market changed the numbers in these locatiOns changed.
`This required traders to read and mentally interpret changes in numbers to see changes in
`the market. At first, several of our traders demanded that they get MD Trader. Once they
`had it and other traders saw the benefits of MD Trader, it spread like wildfire.
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`.
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`In November of 2000, I left Transmarket to join Fuji Futures (a division of Fuji
`6.
`Bank) where I was Executive Vice President of Operations. I was responsible for
`building a local business in Chicago for both floor and electrouic trading. At the time,
`Fuji was providing GL software and exchange provided front-ends to its traders. As part
`of my goal of attracting professional traders to Fuji, I convinCed Fuji to license TT’s
`software in around March or April of 2001. Fuji did this because TT had MD Trader,
`which. was unique at the time to TT. Fuji’s professional trade group chose TT over
`competitors such as RTS, GL, Patsystems and Easyscreen despite the fact that TT’s
`software was more expensive. Fuji became Mizuho Securities in April, 2002 and I
`continued on in the same role until June of 2003.
`I had built the professional trading
`operation up to around 175 traders when I left. Ileft Mizuho to found (along with others)
`Advantage Futures LLC, a clearing firm on the CBOT, CME, LIFFE and Eurex for
`professioaal traders. I am President and COO of Advantage. Advantage currently has
`around 300 traders with approximately 170 focusing on electronic trading. Our primary
`vendor for electronic trading is TT.
`
`In the years following TT’s release of MD Trader, many ISVs have released
`7,
`products that have the same functionality as MD Trader.
`I have been in many meetings
`with representatives of competitive ISVs trying to sell their trading software. Almost all
`of these competitors. if not all, has pitched their product as having a window that “looks
`just like” TT‘s MD Trader and as being cheaper than TT. These competitors needed to
`do this because the MD Trader tool was so important to active traders and provided a
`huge competitive advantage to TT. For example, I have heard these types of pitches from
`reprBSentatives of RTS, Patsystems, GL and Easyscreen.
`
`Around 2 menths ago I met with Steve Brucatol Mr. Brucato is a former
`8.
`employee of TT where he held the position of CTO. Mr. Brucato stated to me that he
`was working to help Espeed develop a new front—end that had similar features to TT’s
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`I also recall him telling me that Espeed might offer its new front—
`product.
`people who were clearing cash bonds through Espced.
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`end for free to
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`I declare under penalty of petjury that the foregoing is '1 e an vorrect. Executed on
`August
`"21 ,2004.
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