This Week: Nasdaq, ICE, FIA Tech, SimCorp and more

FIA Tech connects Trade Data Network to Singapore Exchange

FIA Tech, the futures technology provider owned by the Futures Industry Association, has connected Singapore Exchange (SGX) to its trade data network (TDN), a shared ledger of trade information and market infrastructure. SGX is the third exchange to connect, following CME Group and Eurex. FIA Tech’s chief executive officer Nick Solinger tells WatersTechnology more exchanges are due to connect soon.

TDN aims to provide transparency in exchange-traded derivatives’ post-trade processing, where trade information often goes missing. FIA Tech began developing TDN in May 2020, as “the combination of lock downs, work from home, volatility, and volumes created a lot of operational chaos,” Solinger says.

According to Solinger, TDN operates like a FedEx package tracker for exchange-traded derivatives. Futures trades often pass through multiple clearing houses and brokers before they are booked at an exchange.

Historically, clients have relied on clearing houses for this data. But clearing houses were primarily designed for risk management, Solinger says, not passing around large amounts of data to counterparties. During the start of COVID, the outbreak of war in Ukraine, and the failure of Silicon Valley Bank, reporting was often delayed, and in some cases, clearing houses levied margins on the wrong broker.

“The matrix of ‘where’s my trade’ on a good day is normally pretty process automated, but whenever there’s a high-volume day, we see 7 to 20 percent of trades sort of get lost in the shuffle,” Solinger says.

TDN uses Kafka messaging and AWS to offer a similar solution for trade data transparency as distributed ledger technology (DLT) has aimed to do. FIA Tech was “mindful” of DLT initiatives that “struggled to deliver” proposed results, citing initiatives at the Australian Securities Exchange and the Trade Information Warehouse at DTCC.

In a recent stress test, “we were able to process five days of trading activity across our initial clearing firms in about four hours,” says Solinger. He estimates that one year of futures data is equal to about 4 terabytes.

TDN primarily uses FIX data standards from the Financial Information Exchange (FIX) and has enabled interoperability with vendors ION and FIS, the “two major back-office players,” Solinger says.

Among buy-side clients, Solinger says TDN’s technology means “they’re going home a couple hours earlier.” Futures, Solinger adds, is a “T 0” industry.

Although convenience and reporting speed is a boon for TDN’s data system, “it’s become an urgency on the back of the ION incident [hack], and other disruptions that have highlighted the need to have a failover solution in the case of an outage of your primary clearing platform.”

TDN has recently created a working group on operational resilience. The group, which includes seven global exchanges already, is working to provide a “redundant set of information in the case of a significant technical or operational disruption for a clearing firm,” says Solinger.

Solinger adds, “we’re all expecting rules to tighten in this regard from the comments that have been made by the SEC and the CFTC.”

Connectivity for SGX members subscribed to TDN will roll out in Q4. In the meantime, FIA Tech is in talks to add more exchanges to TDN in the near future.

Nasdaq receives SEC approval for AI powered order type

Nasdaq has received SEC approval to launch its dynamic midpoint extended life order (M-ELO), an AI-powered order type.

M-ELO matches counterparties with longer-term investments on an SEC-regulated exchange by requiring parties to wait for a short holding period before trading. It will use AI to offer live changes to holding periods for M-ELO participants. According to the exchange, M-ELO would speed up the matching of orders, improve fill rates, and reduce market impact. Nasdaq says this is the first real-time AI order type and has demonstrated an 11.4% decrease in mark-outs and a 20.3% increase in fill rates.

ICE completes acquisition of Black Knight

The Intercontinental Exchange, a provider of data, technology, and market infrastructure, has completed its acquisition of Black Knight, a software, data, and analytics company that specializes in real estate data and mortgage lending and servicing.

The acquisition follows ICE’s acquisition of Ellie Mae in 2020, Simplifile in 2019, and Mortgage Electronic Registrations Systems in 2018. The acquisitions have underpinned the creation of ICE’s Mortgage Technology business.

ICE Mortgage Technology uses data to automate the mortgage process, including consumer engagement through loan registration.

SimCorp expands partnership with Virtu Financial

SimCorp, an investment management solutions provider, has expanded its partnership with financial service provider, Virtu Financial. The expanded partnership will offer SimCorp clients enhanced trading, connectivity, and workflow solutions.

The partnership will give SimCorp users further access to Virtu’s communications network, ITG Net, within SimCorp’s FIX-as-a-Service offering. The partnership will further integrate Virtu’s execution management system, Triton, and SimCorp’s order management system.

IPC and Celoxica partner at CHT data center in Taipei

IPC, using it’s Connexus platform, has partnered with Celoxica’s market access gateway to build a hosted and managed colocation solution for a tier-1 investment bank in Taiwan. The solution will increase direct market access and pre-trade risk management for the firm.

IPC will provide managed hosting services in the CHT data center in Taipei, using Connexus colocation, connectivity and chrono services. The partnership aims to increase market access and lower latency trading in Taiwanese financial markets. The solution will integrate with Celoxica’s market access gateway platform to trade multiple asset classes, with pre-trade risk management and low latency connectivity.

Appital launches Insights to help buy side unlock liquidity

Appital, a price discovery and liquidity sourcing technology for asset managers, announced the launch of Appital Insights, which aims to give traders access to liquidity typically unavailable in normal electronic trading venues.

Appital Insights allows buy-side firms to review the viability of executing ADV orders before the technology begins to match or execute orders. Users can then enter indications into the software without their actions being signaled to the market.

The platform builds off Appital’s Turquoise Bookbuilder and integrates into client’s execution management systems, as well as Bloomberg. FlexTrade’s EMS is the first to integrate with Appital Insights.

LSEG’s Acadia offers derivatives and risk program with Northeastern University

Acadia, a provider of risk management services for the derivatives industry, has partnered with Northeastern University’s business school to offer an online certification program in quantitative derivatives pricing and risk modeling.

The certification program targets recent graduates and professionals with basic finance and/or computer science experience. Participants receive a Northeastern University digital credential upon completion and will work with the open-source risk engine (ORE), a software toolkit used by Acadia.

Enrolment began Monday, September 4, 2023 and the cohort will begin Monday, November 6.