Bank of America Merrill Lynch rolled out a new market access platform on Wednesday that performs government-mandated risk controls while minimizing latency.
Dubbed BofAML Express, the new software-based product promises wire-to-wire latencies of less than 10 microseconds. Average latencies tend to be considerably less than that, but can vary depending on a number of factors, according to the company.
Michael Lynch, head of Americas execution services for BofA Merrill, said while the firm has deployed pre-trade risk checks for some time, the new platform is able to compress latency without compromising controls.
On July 14, the first leg of the Securities and Exchange Commission’s market access rule went into effect, mandating certain pre-trade risk checks for clients that broker-dealers supply with sponsored access.
At the end of November, brokers will also have to provide aggregate credit checks for their clients. The platform already has the ability to perform those checks, though BofA Merrill will not have to enforce mandated credit thresholds until the second leg of the rule goes into effect.
Tim Cox, director in global execution services for BofA Merrill, said the platform was designed for high-frequency traders, but he expects non-HFT clients to use the system as well.
“We look at it as democratizing infrastructure,” Cox said. “Technology is a great equalizer, and we have every expectation that non-high-frequency institutions will take advantage of this.”
The software is built on a high-speed network, which Cox said is important as networking times make latencies for order-entry look insignificant. Traders not operating on high-speed networks are not competitive, regardless of how fast their risk-checks are, he added.
BofAML Express was initially developed by Thesys Technologies, the infrastructure affiliate of high-frequency trading firm Tradeworx. BofA Merrill continues to have an ongoing relationship with Thesys for the support of the product.
“The reason we went with Thesys was because of their expertise in high-performance trading,” said John Goeller, managing director in global execution services at BofA Merrill. “They demonstrated an expertise to the marketplace.”
Currently, BofAML Express connects to all major U.S. equity exchanges. The product will roll out in Europe and Asia sometime over the next several quarters.
