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Screenshot of a breaking news alert e-mail from Q2 2017
Financial services technology provider First Derivatives (AIM:FDP.L, ESM:FDP.I) has today announced that IEX, a high-growth equity trading venue dedicated to investor protection, has selected its Delta software platform to provide trade surveillance and analytics. The system will audit billions of market data records daily, with real time and historical market abuse reporting capabilities.
Delta Surveillance is used by exchanges, regulators and brokers to detect trading anomalies that may indicate disorderly or prohibited trading across a range of asset classes. The application is built on top of the Delta Stream architecture, which is powered by the high-performance database kdb+. It is capable of dealing with both structured and unstructured data, forming a key part of an organisation’s Big Data strategy.
First Derivatives has been instrumental in the Australian Securities and Investments Commission (ASIC)’s drive toward ensuring a watertight regulatory environment following the provision of its Delta Stream surveillance system just over one year ago. The Delta Stream system was implemented by the Australian regulatory authority alongside its proprietary SMARTS system, standing ASIC out as one of the first regulatory authorities worldwide to use real-time surveillance to monitor the activities of online trading companies under its auspices.
ASIC has garnered a strong reputation as a prudent authority, contributing to Australia’s appeal as a region in which to establish brokerages in a Western business environment within close proximity to the coveted Asia Pacific region. Similarly, retail FX traders in China, Hong Kong, Singapore and Malaysia favor Australian companies as well as regional branches of American and European firms based in Australia due to its reputation.
ASIC has produced periodical enforcement reports since the implementation of the surveillance systems, making clear reference to the effectiveness of SMARTS and Delta Stream in unearthing irregularities in corporate activity in the region and leading to action against firms which transgress.
As far as this particular application of First Derivatives’ technology is concerned, the avantgarde IEX venue was established at the end of last year, with a view to removing the supposed advantage gained by high frequency traders by introducing a 350 ms delay on all orders.
The upstart exchange had been gaining traction with equity investors, however in April this year, it appeared to be courting the interest of FX traders with an investment by flamboyant investor David Einhorn.
Gerry Buggy, executive at First Derivatives, said: “Over the past decade First Derivatives has worked with electronic trading platforms to help them meet the challenge of managing rapid growth in US market data volumes. That experience, combined with our global surveillance teams’ domain knowledge, has proved to be a powerful combination. IEX sought a solution that offered the performance associated with high speed trading environments and the flexibility to adapt as their business and regulatory requirements grow. These are two of the core strengths of Delta, which we look forward to delivering for IEX.”
John Schwall, Chief Operating Officer and Co-Founder of IEX, commented: “As a market centre that set out to become a critical part of the U.S. National Market System, we recognized the need and responsibility to maintain a fair and orderly trading environment for all of our participants. We wanted a surveillance system that had the ability to run sophisticated alerts designed to monitor and preserve IEX market integrity and orderly trading while allowing us to quickly identify and adapt whenever potentially suspicious patterns emerged. We also wanted a system that could easily integrate with the IEX architecture and could scale to handle the increasing data volumes of the future. In addition to the surveillance function, Delta immediately strengthens our visual analytics capabilities and our ability to provide value-added data services for our clients.”
Brian Conlon, CEO of First Derivatives, commented: “We are pleased with IEX’s decision to select Delta as its platform for market surveillance. IEX, as a new entrant into the market, had the entire range of competing solutions to select from. Their choice of Delta reinforces our view that the solution is ideally suited to manage the surveillance needs of the future.”