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An idea for a new futures product normally comes during conversations between an institution & an exchange salesperson/account manager. It normally sounds like this: "Man, we really think we could trade XYZ futures product in large size if it was available. Can you build it?"

This idea goes from the salesperson through a series of approvals by their boss, their boss's boss and/or a resource committee. Each ring on the approval chain creates a space where the initial idea can be blocked or altered from the original ask, like a game of Telephone.

Product design is another huge area where good ideas can quickly turn into duds. If the design doesn't match the customer's vision, they won't trade it. "We wanted to trade lumber futures, but not THAT lumber future."

After design is finished, the product gets sent to the technology team for development. This means adding it to a long list of things developers need to code, scheduled into multi-week sprints. If your product doesn't make it into a sprint it may be weeks before it gets built.

At the same time, a draft of the product gets sent to various regulators for approval. If the product sets any new precedent or links to an easily manipulated market, it can get rejected or delayed. (Think crypto futures approval). Regulators can take weeks+ to bless a launch.

After all the green lights are given & developers have built the product into the larger exchange platform, you can finally open it for trading. If you're lucky, the product will actually match what the customer wanted & they'll still have an interest in trading it.

More often than not, either the customer's strategy will have changed while you were building the product, or the product wasn't built correctly. Either way, it becomes a low/zero volume market with no revenue almost immediately. (sad face)

As you can likely tell from the above, launching a good futures product that works is really hard. The design challenge mixed with competitive pressures forces exchanges to resort to largely copying what their rivals are making.

That's generally how a TradFi exchange launches products. How does FTX do it? Someone tweets at @SBF_FTX, SBF tells the product guy to build it, they build it, they launch it. No politics. No regulatory approval. No lost message in middle management. It's beautiful.

How can this be anywhere near possible? 1. No middle management - only a few dozen people are needed to launch a product vs. hundreds or more in TradFi. 2. Regulation - For the most part FTX doesn't need approval to launch stuff outside the US. (cont.)

3. FTX is focused on one market - crypto. It's not like there's a cash equities or fixed income business swallowing up all the internal time & resources. Focus matters. 4. FTX is private. They can choose fast growth > profits without dealing with angry investors.

I also find SBF's proximity to the product launch process very valuable for FTX. SBF can connect a CEO's vision to the micro details of a product launch. I'm almost positive CME's CEO doesn't himself approve or work on most of the exchange's product launches, if any.

FTX also has Alameda to help influence product design. FTX itself was launched to be the exchange Alameda wished existed in crypto. If anyone knows what crypto products will work, it's Alameda. This is another game-changing advantage.

There's also the large retail presence in crypto to consider, making Twitter a MASSIVE differentiator for SBF & FTX to get product ideas. They can listen to their customers & respond in real time. TradFi exchanges are BARELY active on Twitter, if at all. That's wild to me.