Nasdaq Repackages Clearing Platform for NFF Tech Stack

Nasdaq is adopting a microservices model as it repackages its clearing platform for inclusion in the Nasdaq Financial Framework (NFF) tech stack.

Lars Ottersgård, head of market technology at Nasdaq, tells WatersTechnology that the microservice components within the clearing platform include tools for multi-asset clearing, real-time risk, collateral management, over-the-counter workflow management, settlement instruction, price calculation, validation, reporting, and services.

One of the products already live on the NFF is the exchange’s cloud-optimized universal matching service. Ottersgård says Nasdaq will bring its other platforms—which service marketplaces, clearinghouses, trading firms, and central securities depositories (CSDs)—into the NFF tech stack one by one. The platforms cover matching/trading, index calculation, market surveillance, real-time and pre-trade risk, collateral management, CSD applications, market intelligence, and quality assurance and testing. 

“We are not taking the old monolith product and putting it on the platform. We are breaking it down into microservices that are embedded in containers to make it truly ‘scale-in and scale-out’ capable through the same platform,” he says. 

One of the pitfalls of monolithic systems is that updates entail testing the whole system, including parts that may not be impacted by the change, says Ottersgård. This makes the process more costly and time-consuming.

“By having smaller components [and] using APIs, if you make a change in that single component, and it still operates with the same APIs, you don’t need to test the rest of the system. You can then just make sure that component still gives the same input/output, even though we do things differently within the component itself. It means you can reduce the testing and introduce changes much faster,” he says. 

While the goal is to provide a certain set of functions as standard, says Ottersgård, clients will still be able to implement tailor-made adaptations on top of those components.

“From the beginning, we built the flexibility that you take the core product, and then there are hook-ins where you put your own bespoke solutions on top,” he says. “We don’t need to rebuild every [piece of] functionality because we can re-use a lot of our historical applications, which is very important for our clients. Then we package them into business objectives or microservices that give true business value, and then package them in these containers.”

In this way, users can mix and match the services they need. Ottersgård says, for example, that clients could take all the microservices that constitute the full clearing system from Nasdaq, or they could choose fewer elements to suit their requirements.

“A client could also say, ‘I’ll take eight microservices from you, but I want to build my own pricing mechanism.’ So they could build that component using the same APIs to connect to our platform, and there could be a mix of solutions we provide or components that the client builds on their own. This could give them [a high degree of] flexibility,” he says.

Components that clients opt to build themselves could address areas where they think they can differentiate themselves from competitors, and therefore choose to retain control. 

Multi-Year Project

The overall aim is to optimize the NFF stack for different use cases. “It’s all going to be on the NFF platform, but we will then adapt it as a compliance platform for the regtech space, a marketplace platform for the trading and clearing institutions, a risk platform for the risk [functions], and so on. We are fine-tuning it, but it’s all the same underlying NFF technology that we’re using,” Ottersgård says. 

The NFF comprises three parts. Nasdaq Core is the heart of the framework and the operational hub driving business applications. Nasdaq Core Services is a set of optional shared services that offer capabilities such as connectivity, data collection, and blockchain. The Nasdaq Business Applications portfolio of solutions supports the full trade lifecycle. The products are not attached to Nasdaq Core, making it easy to add or remove new functionalities. 

Work on the NFF project started in 2015, but was officially launched in 2017. It took Nasdaq two years to develop Nasdaq Core, and it is now in production. Ottersgård says the platform will evolve, with new versions and releases moving forward. 

“When you look at our portfolio applications, we work through them one by one, and we’re going to do it at a pace where there are market requests and needs for it. So we’re not going to take all our products, rebuild them, and then go to market. We’ll do these in parallel. It’s a multi-year effort. But the big, important bulk of the investment of building the core platform, that is now in production,” he says.