Much like the equities market, mistakes and errors can happen causing market disruptions. One firm is now adding a “kill switch” to its trading platform to prevent such occurences.
Traiana, a provider of pre-trade risk and post-trade processing solutions, announced that it has extended the scope of its CreditLink service to include a “kill switch” capability for single dealer platforms in foreign exchange (FX) trading. The switch is intended to stop algorithms from executing orders or halt erroneous trades.
Bulge firm Citi’s and its platform, Velocity, is the first single dealer platform to enhance its connectivity with CreditLink to support this new capability.
According to Triana, by using CreditLink, prime brokers have the ability to monitor their clients’ credit risk and trading activity across multiple ECNs and single dealer platforms on a real-time basis. As a result they can identify limit breaches, modify credit lines and terminate trading activity. CreditLink also supports a wide range of asset classes and trading models, serving as a central risk management infrastructure across spot FX, FX derivatives, cleared swaps and exchange traded derivatives.
“The expansion of CreditLink’s kill switch to single dealer platforms improves risk management controls in the FX markets, bringing the bank trading portals into line with the capabilities we’ve built with the ECNs,” said Jill Sigelbaum, head of FX at Traiana. “By enabling prime brokers and their clients to monitor risk in real-time and take swift actions, the market will be further insulated from technology risks and the losses they can rapidly create.”
The introduction of a kill switch adds to the existing limit monitoring capabilities of CreditLink for single dealer platforms, and will ensure that the risks associated with algorithmic and high frequency trading can now be effectively managed in real-time on these platforms.
Beginning in June 2011, Traiana and leading prime brokers launched an initiative to deploy real-time kill switches to major multi-dealer FX trading platforms, including Bloomberg Tradebook, Currenex, EBS, FastMatch, FXCM’s Institutional Platform, Hotspot FX and Thomson Reuters. However, in recent years electronic FX trading has grown on single dealer platforms and now represents a key area of technology risk in global FX markets.
