Advances in the Technology of Derivatives Trading and Clearing

Nov 8, 2015
System Performance

Interactive Data Introduces Monitoring Service for Trading Infrastructure

More and more firms are outsourcing their trading infrastructure to external providers, creating new monitoring challenges for trading firms. 

Interactive Data, which offers a managed trading infrastructure service through its 7ticks division, has re- sponded by offering an upgrade that will make it easier for clients to monitor system performance in real time.

The cloud-based 7ticks Insight portal, which will be rolled out to current 7ticks customers over the next few months, offers 24/7 monitoring of trading infrastructure provided by Interactive Data, including market access, co-location and proximity hosting, trading systems and market data feeds. The web-based dashboard will deliver real-time monitoring of networks, exchange connectivity, network latency and server and switch performance. 

Designed in HTML 5, the portal supports all current browsers and is designed to function equally well on laptop, tablet or phone. The portal consolidates events in multiple systems into a single real time alert. Its metrics offer visibility into the condition of the infrastructure, enabling the client to identify potential risks early. Historical data also makes it possible to investigate particular performance trends over days, weeks or months.

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Electronic Trading

OTC Global Offers Screen Trading for Options 

OTC Global Holdings, a Houston-based group of interdealer brokers specializing in energy commodities, is now offering customers the ability to execute block trades in natural gas options and other over-the-counter energy products via an online trading platform.

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Exchange Connectivity

Options Expands European Co-Lo Network

Options, London-based provider of high-speed exchange connectivity, announced on Sept. 17 that it has added three more European exchanges to its colocation platform, Velocity. With the addition of Nasdaq’s Scandinavian exchange, Switzerland’s SWX and Austria’s Wiener Borse, the platform now covers seven derivatives markets, 14 equity exchanges and two commodity markets in Europe. “With coverage of the tier one markets already cemented, we have set our sights on changing the economics of accessing every market across Europe,” said Ken Barnes, senior vice president for corporate development and head of the firm’s managed business.

Velocity provides a managed environment for the delivery of direct market data, order entry, servers and colocation space, either as a single managed service or individual component services. The platform leverages the fastest WAN links between key centers, high-performance technology from companies like Arista and Solarfl are and operational processes developed over 20 years in the business.

In addition to expanding its market coverage, the company recently upgraded some of its fiber pathways in Europe. The expanded pipes will enable the company to “accommodate traffic growth and additional point-to-point routes between our seven data centers in the region,” explained Kieran O’Connor, vice president for marketing.

However, O’Connor noted that performance is not enough to win business by itself any more. “Performance tends to be table stakes these days. You simply cannot win business without being on the fastest routes and cutting-edge switching,” he said. “The larger competitive differences are found in the levels of availability and quality control we can deliver due to stark differences in the levels of procedural discipline and automated testing one finds under the hood,” he said.

In addition, security is beginning to matter more as well. “We’re also finding the level of investment in and maturity of our cybersecurity defenses to be a significant point of differentiation,” he said. 

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Swap Compression

CME Puts Squeeze on Notional Exposures

With banks looking for ways to reduce capital charges for their derivatives exposures, clearinghouses are expanding their services aimed at “compressing” swap positions, reducing the overall notional amount and the number of contracts by removing offsetting exposures.

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Electronic Voice

DRW and Eagle Seven Buy into Green Key

Green Key Technologies, a two-year old company that specializes in voice-activated software for traders, won a big endorsement in September. Two Chicago-based trading firms, DRW and Eagle Seven, like its products so much they bought part of the company.

“Their voice software removes barriers for traders, lowers costs for brokers and increases compliance within the financial markets,” said Don Wilson, chief executive officer of DRW. “Green Key has changed the way our traders interact with the marketplace,” said Chris Lorenzen, CEO of Eagle Seven.

One of Green Key’s flagship products is its “Trader Voice Box,” a software program designed to mimic the functionality offered by the traditional telephone turrets that sit on a trader’s desk. Green Key says its product gives traders and brokers unlimited direct connections to their trading contacts over the company’s VolP network. The company also says its product can integrate into systems designed to record and store conversations for compliance purposes, a key need in the current regulatory landscape.

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Trader Tools

Contix Offers Social Media Analytics

Contix, a company that helps traders scan social media for market-moving information, has extended its service to commodity markets. The company has developed algorithms that scan social media and traditional sources of information and identify breaking news events relevant to financial markets. The service was developed for equity traders, but in September the company announced that its algorithms now generate market-moving alerts related to energy, metals, grains and other commodity markets.

“Our trading clients had expressed strong interest in commodities event detection in addition to the equities markets,” said Daniel Leuck, the company’s chief technology officer. “With the amount of data related to commodities flowing through both traditional and social media, Contix can add enormous value to any institution with commodities exposure by surfacing the earliest mentions of valid market-moving news to the trader.”

Contix was established in 2012 as a spin-out from Ikayzo, a company based in Hawaii that combines software development with creative design for clients in finance, government, fashion and e-commerce. Contix says it searches through more than 500,000 social media posts per day and sifts through that information to identify actionable alerts for retail and institutional traders.


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