DECLARATION OF JAMES J. ZELLINGER
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`1, James J. Zeilinger, declare that:
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`I am personally familiar with the facts set forth herein, and, if called as·a witness,
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`l could and would testify thereto of my own personal knowledge.
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`I have over 40 years experience i.n the financial industry. I began my career as a
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`runner in the mailtoom at the Chicago Board of Trade working for Merrill Lynch. I
`worked 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
`~ales. Hennessy was a clearing firm. I worked there for around 13-14 years. During my
`years at Merrill and Hennessy I traded through an ordeT desk. When I left Hennessy, I
`traded for a while both from an office and on the floor of the CBOT.
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`In around 1990, I wa~ doing consulting work on the Globex project for the
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`Chicago Mercantile Exchange ("'CME") when it was fll'St being built. Globex was the
`CME's electronic trading platfonn. ln 1990-91,1 took a job with the CME to run
`operations for Globex. I ran operations for Globex until1994. !n 1994, I returned £o
`Merrill Lynch to run the commercial trading office. After working at Merrill for one and
`half years, ! left to join Transmarket Group L.L.C., a clearing firm and a global private
`trading and investment company that trades various exchange listed derivatives, equities,
`commodities and cash markets electronically. At Transmarket, I created and ran one of
`the first electronic trading rooms for traders. I was also responsible for managing the
`clearing side of the business. When I first started at Transmarket, a few £raders were
`trading electronically on Pl:oject A. We had two Project A terminals. In 1995-1.996, I
`built Transmarket's first electronic trading room.. I continued to overRee the expansion
`ofTransmarlcet's electronic trading until I left in November of2000. During that time,
`the traders used a variety of different systems, jncluding the Project A front-end, the
`Globex. front·end, Trading Technologies ('"M'") software, EMyScreen software and GL
`software. We also used Espeed software to trnde on E.«peed's cash bond market. J was
`also aware of other fronr-end systems, including software offered by PatsyMems. When I
`left, Transmarl<et had over 100 traders trading electronically.
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`I first saw TT's MD Trader in arouo.d the fall of 2000. It became immediately
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`apparent that MD Trader was a superior trading tool to the other systems available at the
`time. The reason I know that MD Trader wac; 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 tban the competition. 1 recall the CFO ofTransmarket at
`the time objecting to our switch over to TT, but we had to make the switch because
`otherwjse we would lose our traders. In fact, we did lose one trader to anotber firm
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`TRADING TECH EXHIBIT 2061
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`because we were having some technical difficulty on our CME connection and were not
`a~le to get the IT software up and running quick enough.
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`At the time, the preexisting screens were not designed for an active trader. MD
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`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 con11ol 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 wovld 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 fix:ed 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 [he 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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`In November of 2000~ I left Transmarket to join Fuji Futures (a division of Fuji
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`Bank) where I was Ex.ecutive Vice Pre~ident of Operations. I was responsible for
`building a local business in Chicago for both floor and electronic trading. At the time,
`Fuji wa.<; providing GL software and exchange provided front-ends to its traders. As part
`of my goal of attracting professional traders t.o Fuji, I convinced Fuji to license Tr 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. I left Mizuho to found (along with others)
`Advantage Futures LLC, a c1eadng firm on the CBOT, CME, LlFFE and Eurex for
`professional traders. I am President and COO of Advantage. Advantage currently has
`around 300 traders wi.th approximately 170 focusing on electronic trading. Our primary
`vendor for c1ecLronic trading is TT.
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`In the years following IT's release of MD Trader, many ISVs have released
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`products that have the same functionahty 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 IT. 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, .l have heard these types of pitches fTom
`representatives of RTS, Patsystetns, GLand Easyscreen.
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`Around 2 months ago I met with Steve Brucato. Mr. Brucato is a former
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`employee ofTT where he held the position of CTO. J\.1r. Brucato stated to me that he
`was working to help Espeed develop a new front-end that had similar features to TTs
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`product. I also recall him telHng m.e that Espeed might offer its new front-end for free to
`people who were clearing cash bonds through Espeed.
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`It is my understanding that Harris Brumfield owned the rights to MD Trader
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`before TT released it as a commercial product. I have always been surpri!ied and 1 have
`spoken with others in the industry that have also been surprised that Mr. Brumfield
`permitted TT to tum MD Trader into a product and offer it to the world. The reason for
`my surprise and my understanding of others' surprise is that Mr. Brumfi.eld could have
`kept the technology behind MD Trader secret a.nd used to create a significant competitive
`advantage for himself in trading.
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`10. MD Trader also benefit~ the clearing firms and the exchanges in that it results in
`traders entering m.ore orders and, therefore, increases volume and liquidity.
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`l declare under penalty of peljury that the foregoing is
`August ...31_, 2004.
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