Businessmodel of Jump Trading

Customer Segments

Jump Trading has a niche market business model, with a specialized customer segment. The company targets its offering at consumers interested in high-frequency trading.

Value Proposition

Jump Trading offers three primary value propositions: accessibility, innovation, and brand/status.

The company creates accessibility by providing a wide variety of options. It is a registered broker-dealer that is a member of multiple exchanges. These include U.S. exchanges such as the New York Stock Exchange and Chicago Mercantile Exchange, and European ones such as Eurex and the London Stock Exchange.

The company places a strong emphasis on innovation. It has a quantitative basis and creates technology solutions that can execute algorithmic trading strategies. It has invested significantly in high-speed trading infrastructure and technology; for example, in 2013 it purchased a Belgian microwave tower formerly owned by the North Atlantic Treaty Organization (NATO).

The company has established a strong brand due to its success. A privately-funded firm, it is one of the top companies on the Chicago Mercantile Exchange, with over $500 million in annual revenues. It has over 500 employees who belong to over 20 teams. They operate in the equities, options, and futures markets in Chicago, London, New York, and Singapore, and trade across all major asset classes in Europe, Asia, and the Americas. Lastly, the firm is a member of the Principal Traders Group, an advisory group created by the Futures Industry Association to represent principal traders.

Channels

Jump Trading’s main channel is its website. The company promotes its offering through its social media pages and participation in conferences.

Customer Relationships

Jump Trading’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees.

Key Activities

Jump Trading’s business model entails maintaining a robust platform for its customers.

Key Partners

Jump Trading often forms partnerships in order to achieve strategic goals.

For example, it partnered with the University of Illinois College of Medicine and College of Engineering to design the Jump Trading Simulation and Education Center. Situated on the OSF Saint Frances Medical Center Campus, the facility is a medical training, research, and development center.

Jump Trading also formed a partnership with Farnsworth Group, which assisted with planning and construction of the center.

Key Resources

Jump Trading’s main resource is its proprietary software platform, through which it conducts trading.

It depends on its human resources in the form of technology employees that maintain the platform, as well as programmers, scientists, and mathematicians that build its complex trading algorithms. Employees’ backgrounds include tech firms, the trading industry, research labs, and Ph.D. programs.

Lastly, Jump Trading depends on private funding rather than private equity or outside investors.

Cost Structure

Jump Trading has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is likely transaction expenses, a fixed cost. Other major drivers are in the areas of customer support/operations and research/development, both fixed expenses.

Revenue Streams

Jump Trading has one revenue stream: revenues it generates from fees charged for regular access to its proprietary trading platform.