The Grid at Work in the Securities Industry
Situation:
Trading and equities firms want to provide greater transparency to their customers in order to show quality of execution and order flow control. Federal regulations adopted by the Securities and Exchange Commission also require a full audit and recorded trail of trade performance. A top 5 brokerage house was burdened with an outdated, almost archaic system of trade reporting and execution, which was not flexible enough to manage new or changing data. Customers, brokers, and regulators did not have timely access to critical business intelligence.
Protocols:
S3 Matching Technologies was retained by the Wall Street brokerage firm to manage vast amounts of trade data on a daily basis. TeraMatch technology was to be deployed for analysis of order flow and to deliver real time reports as defined by their business rules. The brokerage was executing approximately 100,000 trades daily but did not have an adequate method for conducting immediate post trade analysis. The ability to combine data, examine market depth and ascertain best price was limited by the firm's legacy technology.
Challenge:
TeraMatch needed to combine billions of bits of data from multiple sources regarding every trade executed and every order routed The analysis of this information then needed to be used as a basis to assess performance of the various trades conducted by the top 5 brokerage house. The trade analysis and business intelligence had to be performed in near real time and then a report immediately issued to the brokers, regulators, and the client. If this system was properly implemented, trades that were executed but did not get best price could be corrected by the brokerage firm, improving the firm’s performance and customer satisfaction.
Solution:
S3 Matching Technologies created architecture to flow all of the broker’s daily orders to a secure data center in Austin, Texas. This included over-the-counter equities, options, and all business currently in the firm’s order management system. The data is streamed in the brokerage’s format to staging servers at S3’s facilities. A similar feed is taken in from Comstock, which provides the entirety of trades and quotes in the national market system as they happen throughout the course of a trading day. This includes NBBO data, trade tape prints, Level II market depth, options, pink sheets, bulletin board stocks, and all dynamics relevant to financial securities in the markets. This information, along with the data from the brokerage firm, is then converted to S3’s Unified Data Format as quickly as it arrives on S3’s servers. TeraMatch then compares all of the brokerage firm’s trades against the point-in-time conditions existing in the entire market when those trades were executed. A near instantaneous report on execution performance is generated and electronically distributed.
Benefits:
If trades are disimproved, TeraMatch technology is able to issue a report so that the trader can take action on receiving a better, corrected price. These exception reports improve the brokerage firm’s ability to perform and better satisfy its customers while also providing audit information required by federal regulators. TeraMatch was able to maintain the integrity of all data while also facilitating rea time reporting for brokers.
