BS/BS/2004 09:38
`
`13124762501 ·
`
`DECLARATION OF JAMES J. ZELLINGER.
`'·
`
`1, James J. Zeilinger, declare that:
`
`I am personally familiU witb.the facts set fOrth herein, and, if caUecl ~-a witness,-"
`1.
`l could and would testify dlereto of my own persouil Icnowlcc!se-
`
`I~avc ovcr40 years ~xperience in the financial industry. Ibea;n my career u ~
`2.
`nmnet in the m.a.iirOQm at tbe Chicqo Board of Trade wodclng for MeniU Lyncb. I
`·
`worked in various position& at M~ Lynch for 13-14 )'CIIIB· 1181\: Merrill Lynch to be a
`partner and part-owner in Heuneasy & Associates where I was involved in operations and
`~ales. Hennessy was a clearing firm. I woriced there for around 1.3·14 years. During my
`years at Merrill and Hennessy I ltaded through an order deale. WbCD J lett Hennessy. I
`traded for a whlle both from an office and 01t the floor of the CBO'I'.
`
`In around 1990, I wa., dolng consulting work on tbc Olobex project for lbe
`3.
`
`Chicago Mercantile Exchange ("'CMB11) wbcn it was first being built. GJobex Will the
`CMR's electrontc trading platfoxm. 1u 1990-91,1 took a job with the CME to tun . .
`operations for Olobe.x. 1 ran operations for Olobex urttill994. In 1994, I tetUmcd to
`· ·
`Merrill Lynch to run the commercial tradins office. After working at Merrill for one and.
`half years, I left to join Tranama:dcet Orotlp L.L.C., a dealing firm and a global private .
`trading and inveabtleot company tbat trades various exchange Jisled derivatives, equit:lt!$,
`wmro.oditica and CQb. mmm decttoniCIUy. At Transmarket, I created and ran one of
`tbc first electronic trading rooms for traders. I was alao responsible fot ltlll1aging the
`clearing side of tbe business. When 1 first started at Thmsmll'ket, a few traders were
`·
`trading electronically on Project A. We J\ad two Project A terminals. In 1995-1996. I
`·,
`built Tlansmarket's first electronic tnlding room. I continued to Ovetflec the expmsion
`ofTraoamaxbt's electronic trading until I left in November of 2000. During that time,
`the ttadenJ used a variety of different systems, including the Project A front-end, the
`Globex front-end, Trading Technologies ("'IT') :~oftware. BuyScreen software and GL .
`software. We also used Bspced software to trade on B.~'s cash bond market. J was
`also aware of other front-end systems, including software offered by Patsyatems. When J
`left, Transmarkct had over l 00 traders trading electronically.
`
`I first saw 'IT's MD Trader in around the fall of2000. It became hn.meWately
`4.
`apparent that MD Ttadcr was a superior trading tool to tbe other 8}'5telns available at the
`time. The reason J .know that MD n.der wa.~ superior was dmt the tradets insisted they
`have it We licensecf'IT's software to get MD Trader despite tbo fact that it was
`significantl)' more expensive than the competition. l rccaU the CFO of Tl'IJJsmartet at
`the time objecting to our switc:b over to 'IT, but we had to make the switch because
`otllerwi$e we would lose our traders. In fact, we did lOse ·one tnu:lcr to anotbtt fltm
`
`1
`
`CONFIDENTIAL
`
`TT05813
`
`Confidential
`
`TT0061410
`TTX00061410
`
`Page 1 of 3
`
`TRADING TECH EXHIBIT 2218
`IBG et al. v. TRADING TECH. - CBM2016-00054
`
`

`
`09/05/2004 09:38
`
`13124762501
`
`PAC£ 02
`
`'
`
`.
`
`because We were ha~in,g .some tccbnical difficulty on our CMB connection and were. not
`~lc to .get the Tr softwue up and running quick enough.
`·
`At the time, the p:=xisting $cteODS were not designed for an acti'Ve adet. MD
`5.
`Trader was the finlt application dosiped to be used as a 11ue tradlna tool by the tJ:ader to
`enhance trading. The preexisting Systems were order book type sam1S that were buflt ·so : . . ·
`that a broker order desk conld keep control of its Ol'dMs and to limit errors. MD ~· .
`was far superior for the active trader because it w.S fast It improved the way the trader . · · · · ·
`saw the market. This wu· especially true for spreader& who would put multiple markets ' . . . ·
`up side by side. MD Trader. allowed tbc tradets to easily see the movement of the 11'18Tket .
`because the market data was displayed dynamically relative to flxcd price.' on the screen
`so tbat the data would move op and down on the seieen. The ptaxisting screens
`displayed the beat bid and best uk prices in designated locations on the screen (typically
`sJde by sjdc) such that wben the mmct 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 tbcy
`had it and other traders saw the benefits of MD Trader, it spread like wildfire.
`·
`
`In November of 2000, !left Transmarket to join Fuji .Folure& (a division of Fuji
`6.
`Bank) where I was Ex~tive Vice Pre5tdent of Operations. l was l'IISponslble for
`building a local bu&iDes& in Chicago for botb floor and electronic lrading. At the time,
`Fuji wu providJns OL softwate and oxcbaoge pro~ded front-ends to its traders. A., p.t
`of my goal of attracting professional traders to Pllji, I convinced Flljl to license TT's
`software ju around March or April of 2001. Fuji did this bec1115e 1T bad MD Trader,
`which was unique at the time to TT. Fuji's prcfessionallrade gtoup c:hOSc 1T over
`competitOnl such as RTS, OL, Pau,)'ltems and Euyscreen despite the fact that 'IT's
`software was more expensive. Pujl became Mlzuho Securities in April, 2002 and J
`~ontinucd on in the same role until June of 2003. I b&d buUt the profe.~sional trading
`operation up to ~nd 175 ttadet$ when I left. I left Mimho to found (along with others)
`Advantage Fu~ LLC, a cleating firm on the CBOT, CME. UFFE and EUJex for
`professional traders. I am President and COO of.Advantage. Advantage C1U'l'ently has
`around 300 traders with appro,Umately 170 focusing on electronfc trading. OUr primary
`vendor for electronic trading is TI'.
`
`ln the years following TI's \'dcas8 of MD Trader, many JSVs have released
`7.
`products that bave dle same functionality as MD Trader. I have been in IDAllY meetings
`with representatives of c:ompctidve lSVs tryjDg to sell their ll'ading .software. Almost aU
`of tbcae CQIJlpetitors, if not all, bu pitched their product as having a window that "'ooks
`juat like'' 'IT's MD Trader and as being cheaper than IT. These competiton needed to
`do this bcC8.1l$C the MD Trader tool wll8 $0 important to active traders and provided a
`huge competitive advantage to 'IT. For example. l have heard the.'le typeS of pitches from
`repre.t~entati ves of RTS, Patsystems, GL and Basyscrccn.
`
`Around 2 months ego I met With Steve Btucato. Mr. Brucato is a former
`8.
`employee of 'IT where be held the position ofCI'O. Mr. BtUcato stated to roc that he
`was working to help Especd develop a new front-end tbat had sirnilar feature& to 'IT's
`
`2
`
`CONFIDENTIAL
`
`TT05814
`
`Confidential
`
`TT0061411
`TTX00061411
`
`Page 2 of 3
`
`TRADING TECH EXHIBIT 2218
`IBG et al. v. TRADING TECH. - CBM2016-00054
`
`

`
`69/85/2084 89:38
`
`13124762581
`
`TRADIHG TECt+Q..OGIES
`
`PAGE 03
`
`product. I also recall h~ ~Uing tne that Espeed might offer its new front-end for~- to
`people who were clearing cash bonds through as~
`
`It iS my understanding that Harris BrUmfield owned tbe rights to MD Trader
`9.
`before IT released it as a eommercia1 product I have always bacn &utprl.~ and I have
`spoken with OChers iu the indusay tbat bave also been surprised that Mr. Brumfield
`permitted TT to l\Jm MP Trader into a prodoct and offer it to the world. The rea8on fur
`my surprise and my undemanding of others' surprise Is that Mr. Bl'U!Ilfi.eld could have ·. ·
`kept tbc technology behind MD Tnlder secret aod used to create a sigrutlcant competitive ..
`~·for him&elfin tl'ading.
`·
`· · : '
`
`·to. . MD Trader also bendits the clearing firms ind the exclwlges in tbat it ~ults in
`traders entering more orders and. therefore. increases \'olume 111d liquidity.
`
`1 declare tmder penalty of pe!jtny that the foregoing is
`August ..:J.L, 2004.
`.
`
`CONFIDENTIAL
`
`3
`
`TT05815
`
`Confidential
`
`TT0061412
`TTX00061412
`
`Page 3 of 3
`
`TRADING TECH EXHIBIT 2218
`IBG et al. v. TRADING TECH. - CBM2016-00054