Financial firms worldwide are increasingly being encouraged to address their communications not only to meet upcoming regulations, such as MiFID II, but also to adopt new paradigms, and get closer to clients, so that they can source liquidity more easily.
By Tim Carmody VP, Network Product and Engineering at IPC for e-Forex Magazine – first published March 2017
Connectivity is critical for capital market participants – but that’s nothing new. The financial markets industry has been talking about the importance of connectivity for data and voice communications for quite some time. What is new is that financial firms worldwide are increasingly being encouraged to address their communications not only to meet upcoming regulations, such as MiFID II, but also to adopt new paradigms, and get closer to clients, so that they can source liquidity more easily.
Given today’s volatile markets, investment managers and brokers are continually faced with a number of complex trading challenges. Indeed, financial organisations are under growing pressure to support collaboration across the enterprise, seamlessly share corporate resources and applications, enable best trade execution and securely connect all of their multiple locations around the globe. Conquering these challenges is essential for firms needing to remain competitive, however, cost, a lack of resources and performance issues can often stand in the way.
To connect multiple office locations and distributed services firms must ensure they have a private and secure infrastructure that enables mission-critical enterprise connectivity for data, voice and video applications. More and more institutions are migrating their on-premise solutions to cloud-based models. Scalable and adaptable, the cloud has the advantage of being able to power new workfl ows, meet stricter regulatory and security requirements, and provide the fl exibility needed to integrate new innovations and applications when necessary. To do so, cloud-based services and distributed trading execution, embedded at liquidity centers, require coherent, secure connectivity.
CLOCK SYNCHRONISATION AND TIME-KEEPING
Ensuring accurate and secure clock synchronisation and time-stamping is also a major challenge for financial firms. Indeed, with the regulatory environment becoming increasingly stringent, the need for pre- and post-trade transparency is growing with each passing year. Any firm that trades in the United States or European Union needs reliable, synchronised clock feeds to connect to their trading applications and order management systems.
Time precision and stamping are at the heart of regulatory compliance with MiFID II RTS-25 and FINRA Rule 4590, placing strict requirements on the granularity of timestamps and the maximum divergences of clocks that are being read. Clock synchronisation subsequently plays a critical role in investor protection by being a mechanism that further supports fair, safe, efficient, and transparent markets.
In addition to electronic trading compliance, firms relying on voice trading also need to remain compliant by guaranteeing their voice systems record legacy T1s and E1s through reliable clocking to avoid a degraded service and enable regulatory monitoring of trading activity.
DRIVING BUSINESS GROWTH
All financial firms have their complexities; however, their networks shouldn’t be one of them. It is important that firms ensure they are able to embed services closer to liquidity venues and market participants, whether co-located or across a wider community. Another industry trend is SaaS and Cloud-based models fast becoming the norm within the financial markets community. As such, market participants need high precision, synchronised and traceable time feeds across different technologies and across global markets.
IPC is an expert in helping the financial community interact and proactively address market challenges, ensuring firms remain connected and compliant. The company offers one of the largest Financial Markets Network portfolio, connecting global financial centres and allowing access to more than 6,000 market participant locations across 700 cities in more than 60 countries. The portfolio includes data connectivity solutions consisting of the Connexus Extranet, Connexus Ethernet and Connexus WAN, as well as voice solutions consisting of Connexus Voice and Trader Voice services.
The company’s Connexus Infrastructure Services (CIS), a managed private and hybrid Infrastructure as a Service (IaaS), enables financial firms to execute a variety of electronic trading strategies and embed services closer to liquidity venues and market participants, whether co-located or across a wide community.
IPC also recently launched Connexus Chrono, a turnkey clock synchronisation and time stamping service engineered to deliver high precision, synchronised and traceable time feeds to global financial market participants. The service can be delivered in a variety of different levels of accuracy ranging from 1 microsecond to 250 microseconds, and is delivered worldwide.