DECLARATION OF LAWRENCE SCHULMAN
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`I, Lawrence Schulman, declare that:
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`I am personally familiar with the facts set forth herein, and, if called as a witness,
`1.
`I could and would testify thereto of my own personal knowledge.
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`I have a B.A. in Mathematics and Economics from Wesleyan University and an
`2.
`MBA in Finance from the University of Chicago.
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`I have over 20 years experience in futures and options trading and research and in
`3.
`the development and training of traders. Early in my career, I worked for the Chicago
`Board of Trade ("CBOT") and was a key member of the team that developed the options
`contract on the T-Bond future. In 1982, I became a managing partner of Singer Wenger
`Trading Co., a proprietary trading firm where I developed proprietary models for pricing,
`risk analysis, and volatility management and where I managed a team of futures and
`options traders.
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`In 1985, I formed my own firm focused on yield curve and interest rates options
`4.
`arbitrage. I sold this firm to First Options in 1986 and stayed on as Vice President and
`General Manager of the proprietary trading division. In this role, I developed and
`implemented software that permitted pricing, risk control and accounting to be done in
`real time.
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`From 1989 to 1995, I traded for my own account and did consulting work. My
`5.
`consulting work included research and trading system design and the creation of trading
`strategies for futures options trading. I joined the staff of BOG Trading LLC in 1995,
`where I developed several experimental trading strategies for trading interest rate options
`and short-term interest rates. I also directed research in volatility and arbitrage
`techniques.
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`In 1997, I left BOG Trading and founded a consulting firm with two other
`6.
`specialists in trading strategy modeling and training. Together we conducted training
`courses in trading, risk management and credit evaluation and sold those services to firms
`that wanted to outsource the training function.
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`In 1998, I joined Goldenberg, Hehmeyer to design and develop a training program
`7.
`for their traders. I also was responsible for developing the strategy and implementation
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`TRADING TECH EXHIBIT 2044
`TD Ameritrade v. Trading Technologies
`CBM2014-00135
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`Page 1 of 3
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`plan for a new purely screen-based trading business. In 5 years, the firm became the
`largest proprietary interest rate trading company on exchanges in Germany, the U.K. and
`the United States. I built the operation from a start-up to a team of over 175 traders with
`locations in Chicago, New York and London. I was responsible for both the strategic
`direction and the day-to-day management of all aspects of the proprietary electronic
`trading business.
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`In late 2003, I left Goldenberg, Hehmeyer to set up Cheiron Trading LLC - a
`8.
`proprietary electronic futures trading firm. Cheiron is located at 3 First National Plaza,
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`141h Floor, Chicago, Illinois.
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`I first saw a beta version of what became TT's MD Trader product sometime in
`9.
`2000 at TT' s offices in Evanston, Illinois. I saw that this tool had potential and that it
`was different than the types of order entry tools being used for electronic trading at the
`time. In particular, MD Trader provided a static column of prices about which market
`data was displayed such that the market data moved relative to the prices. Visually, this
`provided the trader with an intuitive way to sense the direction and velocity of the
`market. Also, it allowed for very simple and accurate order entry.
`
`Goldenberg, Hehmeyer became a customer ofTT's MD Trader when it was
`10.
`launched as a product. Once I started using the product, I saw that it was better than the
`preexisting order entry screens. In particular, it was faster in that by providing a more
`intuitive display, it reduced the time it takes for a trader to recognize opportunities. Also,
`it allowed for order entry with less errors than preexisting screens because a trader can
`quickly enter orders at particular price levels with absolute confidence that he will send
`an order at the intended price. This was so because there was no risk of the prices
`moving while the trader was attempting to enter an order. The product also had a one(cid:173)
`click recentering feature that was valuable because it allowed the trader to quickly bring
`the display of the market to the center of the screen. I had never seen any of these
`features in preexisting electronic trading tools.
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`The combination of the more intuitive display and the fast and reliable order entry
`11.
`cause MD Trader to be a faster tool than preexisting systems. Speed is critical to the
`success of electronic traders. Anything that increases the speed in which a trader can
`send an order to an electronic exchange is very valuable.
`
`12. MD Trader provided a significant change to the order entry screens that were
`prevalent at the time of its release. Prior to the release of MD Trader, traders did not
`even perceive a problem with the old tools they were using. Only after seeing the
`benefits of MD Trader did people like myself realize the shortcomings of the preexisting
`systems. In fact, despite the benefits of MD Trader, when it was first launched as a
`product we had some difficulty convincing traders to switch over to MD Trader because
`they were so used to using the older style screens. Ultimately, though, these traders made
`the switch.
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`After TT launched MD Trader, many competitors of TT released products that
`13.
`had similar features, such as the static price, the improved order entry and the recentering
`features.
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`I declare under penalty of perjury that the foregoing is true and correct. Executed on July
`2.. g' 2004.
`
`~ftL
`
`Lawrence Schulman
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