Post-trade outage drives pre-trade regulation


Post-trade outage drives pre-trade regulation

http://www.thetradenews.com/USA_news/Operations___Technology/Post-trade_outage_drives_pre-trade_regulation.aspx

For the first time in the modern era, issues related to the post-trade formation and dissemination of a consolidated quote brought trading in Nasdaq-listed stocks and equity options based on those stocks to a halt for approximately three hours on 22 August.

Unlike Nasdaq OMX’s infamous May 2012 Facebook initial public offering (IPO) failure, which involved Nasdaq OMX exchange systems and eventually cost the company US$10 million in fines from the US Securities and Exchange Commission (SEC), Thursday’s trading outage is thought to involve systems which route securities data to the exchange.

“Over the next few days, Nasdaq OMX is in the unenviable position of being seen by the public as the source of the problem, even though we do not know where the failure occurred,” explains Robert Stowsky, senior analyst with industry research firm Aite Group. “It could have been a problem at the securities information processor (SIP) or in one of the exchanges contributing data to the SIP.”

The role of SIPs in the US equities markets is to collect equity trade quotes and completed trade data for eventual distribution and publication.

In the case of Nasdaq OMX, it administers the SIP used to create the consolidated quote for Tape C securities, which consist of Nasdaq-listed equities, and is managed by the OTC/UTP operating committee, which represents the 12 US exchanges that trade Nasdaq-listed securities and the Financial Industry Regulatory Authority (FINRA) that operates the Trade Reporting Facility, which is used by alternative trading facilities (ATFs) to report their trades.

A separate industry organization, the Consolidation Tape Association, oversees the formation and dissemination of the Tape A and Tape B consolidated quotes, which consist of securities listed on the New York Stock Exchange (NYSE) and American Exchange (Amex) respectively.

“This is more a market infrastructure issue rather than a single-exchange issue,” adds Stowsky. “It just happens that Nasdaq OMX maintain the Tape-C SIP in this case.”

According to the limited information provided by Nasdaq OMX, which declined requests for comment, the SIP administrator began to notice a degradation in quote and trade distribution due to a connectivity issue. Nearly 75 minutes after Nasdaq OMX first identified the issue, the exchange halted trading in all Tape C securities. It then halted trading in all options trading based on those securities 12 minutes later. It was not until 51 minutes after Nasdaq OMX halted its trading of Nasdaq-listed securities that it implemented a regulatory halt in trading of all Tape-C securities.

The SIP managed to resolve the issue in 30 minutes, said Nasdaq OMX officials and began a phased re-start of trading at approximately 15:25 ET.

Although trade resumed prior to the closing bell, the industry and investors found it quite disconcerting.

“Any system that is as strategic to the operation of the US equities markets, such as a market utility like the SIP, that required 100% up-time should have had ‘hot’ failover capabilities,” said William Karsh, a special advisor at the National Stock Exchange (NSX). “Every system, which is critical to the US market system, should have this capacity.”

Karsh suggests that the SIP administrator or oversight committee put together plans or have processes in place to prevent similar events in the future. “If any participant acts in a manner that jeopardises a system’s performance and affects fellow users of the system, there should be a way to block the participant so that behavior does not cause the system to fail,” he adds.

The failure follows other serious technology problems for Goldman Sachs, which released a rogue algorithm on 20 August, which caused havoc with its options trading.

Goldmans’ algorithm sent erroneous options orders in the early minutes of the trading day and could cost the investment bank up to US$100m. Exchanges are currently in the process of identifying which order should be cancelled and the full cost may not be known for some time.

Regulatory knock-on

The trading outage comes at a time when the SEC is focused on trading systems and technology, having recently ended the comment period of its proposed Regulation Systems Compliance and Integrity (Reg SCI) on July 8.

If the regulation is implemented as written, it will replace the SEC’s voluntary compliance system for developing, testing and maintaining systems critical to the operation of the US equities market.

Aite’s Stowsky, sees the regulators sharing some culpability in the trading outage due to the SEC’s implementation of Regulation NMS, which created the current market structure.

Whenever there is an industry utility, it introduces a potential single-point of failure, he says and doubts if the distributed market structure has been tested rigorously.

“My experience in the industry is that organisations tend to squeeze the testing and quality assurance as they approach product delivery deadlines.”

Stowsky is also sure that politicians, and hence the regulators, will be following the reasons for the trade outage closely since it affects the perception of the US equities market as a fair and well run market.

“Anything that shakes that view will move to the top of their legislation or regulatory priority list.”

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CameronTec’s FIX Catalys Muscles in on Central and Eastern Europe


CameronTec’s FIX Catalys Muscles in on Central and Eastern Europe

http://www.bobsguide.com/guide/news/2013/Jun/19/camerontecs-catalys-muscles-in-on-central-and-eastern-europe.html

CameronTec providing CEE Stock Exchange Group with connectivity technology and trading infrastructure to manage and support the entire trading lifecycle.

CameronTec, the global standard in connectivity technology and trading infrastructure today announced that CEE Stock Exchange Group (CEESEG) has selected the Catalys line of products.

The Vienna Stock Exchange established the central execution interface (CEESEG FIX) for the four CEESEG members (Vienna, Budapest, Ljubljana and Prague). It also acts as market data hub for the six “cooperation” exchanges of Banja Luka, Belgrade, Bucharest, Macedonia, Sarajevo and Montenegro, and a further three energy exchanges in Eastern Europe.

CameronTec’s Catalys infrastructure will provide the CEESEG with an open-standard-based and centrally managed platform to truly harness performance, data interoperability, and business insight. This five year agreement includes CatalysTrade Front Ends, Market Data Layer and EnBS / ETS Adapters which will enable the exchange to seamlessly monitor, manage and control the entire order and trade flow as well as the market data flow from all respective venues. Catalys is underpinned by CameronTec’s market-leading connectivity technology, and engineered on the widely acknowledged standard in FIX engines, CameronFIX.

“CameronTec looks forward to further expanding its valued partnership with CEESEG for the long-term to provide state of the art FIX connectivity and trading infrastructure for what is undoubtedly the largest exchange operator in the region. We look forward to working with Wiener Börse to bring the broader benefits of Catalys to all members of the CEE Stock Exchange Group,” comments Anders Henriksson, CEO for CameronTec.

Catalys is designed to further empower brokers, banks and the buy-side to aggregate, view and manage related trade data. FIX transactional data and also latency, risk and operational data, all from a multitude of disparate third party systems, gateways and applications. Earlier in 2013 CameronTec announced latest technology enhancements included in Catalys v2.1, designed to further expand the Catalys offering and addressing critical areas of the deal life-cycle – pre-trade, trade and post trade, for a complete, modular FIX infrastructure platform built to address multi-asset, multi-market trading.

Fusion Systems’ hardware accelerated Raptor Raw helps traders achieve pre-trade risk management…


In today’s trading marketplace, where increasingly diverse and widespread regional and governmental regulations are imposed, there is a renewed focus on risk management, specifically on pre-trade risk exposure.

via Pocket http://www.bobsguide.com//guide/news/2013/Jun/12/fusion-systems-hardware-accelerated-raptor-raw-helps-traders-achieve-pre-trade-risk-management-compliance.html June 15, 2013 at 07:18PM

Interactive Data And DelphX Team Up To Provide Real-Time Pricing To Fixed Income Market


U.S.

via Pocket http://www.bobsguide.com//guide/news/2013/Jun/11/interactive-data-and-delphx-team-up-to-provide-real-time-pricing-to-fixed-income-market.html June 15, 2013 at 07:10PM

Succession Systems says real-time trade compliance system deployed by Newedge to meet Canadian Requirements


Succession Systems says real-time trade compliance system deployed by Newedge to meet Canadian Requirements

http://www.automatedtrader.net/news/at/142800/succession-systems-says-real_time-trade-compliance-system–deployed-by-newedge

Anthony Masso, CEO, Succession Systems

Anthony Masso, CEO, Succession Systems

“We tune the implementation to scan the orders in nanoseconds.”

New York City/Toronto – Succession Systems said Newedge Brokerage had deployed its pre-trade compliance solution to meet regulatory requirements for automated trading risk controls in Canada and the United States.

“Compliance requires the consolidation of real time trading flows across many different trading technologies,” said Anthony Masso, CEO Succession Systems. “A broker may have several different trading systems and the Market Access Risk System must adapt to all the platforms in use by clients.”

Succession said its TripleCheck Market Access Risk Solution consolidates, controls and reports on the trade flow from third party trading platforms, direct market access routers, and co-located proprietary servers.

“We tune the implementation to scan the orders in nanoseconds,” Masso said.

Brokers in Canada were given until May 31 to deploy the trading controls needed to meet rules for Canadian exchanges. Pre-order entry filters are required across all trading activity for brokers to manage trading exposures of clients in real time.

New automated trading regulations have been rolling out around the world after the US Securities and Exchange Commission introduced rule 15c3-5 in 2011.

Succession said that prior to the ruling, many brokers relied on their overnight back office systems to reconcile the trades and calculate the client positions, whereas regulators now wanted checks done in real time so that risk limits are enforced on an intraday basis.

Fusion Systems’ hardware accelerated Raptor Raw helps traders achieve pre-trade risk management…


In today’s trading marketplace, where increasingly diverse and widespread regional and governmental regulations are imposed, there is a renewed focus on risk management, specifically on pre-trade risk exposure.

via Pocket http://www.bobsguide.com/guide/news/2013/May/9/fusion-systems-hardware-accelerated-raptor-raw-helps-traders-achieve-pre-trade-risk-management-compliance.html May 12, 2013 at 04:16PM

Nasdaq OMX Nordic launches low-latency risk checks


A new pre-trade risk management tool for listed derivatives trading will shift risk checking to the exchange level and reduce latency for market participants, according to Nasdaq OMX Nordic.

via Pocket http://thetradenews.com/news/Asset_Classes/Derivatives/Nasdaq_OMX_Nordic_launches_low-latency_risk_checks.aspx May 11, 2013 at 04:42PM

Inforeach Offers New Approach to Transaction Cost Analysis (tca)


“Second Opinion” real-time TCA service provides pre-, at- and post-trade analytics with unique statistical approach for greater accuracy Transaction Cost Analysis (TCA) is becoming one of the most sought-after trading tools for improving execution quality and reducing transaction costs.

via Pocket http://www.bobsguide.com//guide/news/2013/Apr/12/inforeach-offers-new-approach-to-transaction-cost-analysis-tca.html April 14, 2013 at 05:58PM

New SFC rules shift responsibility to intermediaries


The Hong Kong securities regulator has added new compliance and risk management rules for brokers and stricter standards for systems reliability and maintenance, in a report welcomed by the industry.

via Pocket http://thetradenews.com/news/Regions/Asia/New_SFC_rules_shift_responsibility_to_intermediaries.aspx March 29, 2013 at 10:42AM

ACTIV Financial Extends North American Pre-Trade Risk Control Offering to Canada


ACTIV Financial, a global provider of real-time, multi-asset financial market data and solutions, today announced it is extending its North American coverage of ACTIV TradeDeck, a fully managed solution providing an ultra low latency pre-trade risk gateway, to all Canadian exchanges for equities, o

via Pocket http://www.bobsguide.com//guide/news/2013/Feb/11/activ-financial-extends-north-american-pre-trade-risk-control-offering-to-canada.html February 13, 2013 at 07:15PM

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