For the stock exchanges, business has become more about technology than actual executions.
How to best use it. How to create it. How to refine, etc. But one thing for sure is that exchange technology is modernizing at a rapid clip. Of course, it has to. It has to adapt and grow up to be smart enough to provide low latency, high-performance flexible technology for the brightest, smartest fintech companies now entering the market. Also, it has to do this while providing robust and reliable technology that existing successful exchanges require — a tall order, especially given the years existing legacy systems have been in place. [IMGCAP(1)]
Traders Magazine editor John D’Antona Jr. recently spoke with Magnus Almqvist, Head of Technology Sales, Aquis Technologies about how his firm, Aquis Technologies, is providing low latency, high volume matching engines and high-performance surveillance technology that is cost-effective and will take the market into 2020 and beyond.
TRADERS MAGAZINE: Tell us about Aquis Technologies?
Magnus Almqvist: Aquis Technologies is part of the global exchange services group, Aquis Exchange PLC. We provide modern, robust and cost-effective matching engine and high-performance surveillance technology services for capital markets exchanges, banks and brokers. With an exchange consultancy, SaaS and live production services, we provide our technology on a flexible and adaptable basis for our clients’ needs. Our technology has been built from the best traditional exchange principles, yet is fit for contemporary market models, including our own FCA and AMF regulated modern and disruptive market for equities trading, Aquis Exchange, which itself has used it since November 2013. Now being licenced and adopted by exchanges and market participant innovators around the world, we believe this reflects an appetite for modern exchange technology and services.
TM: What are the challenges faced by the exchange industry?
Almqvist: The exchange industry is challenged with regulatory implementation requirements and the pace of innovation. Incumbent processes are fast becoming redundant, and new methodologies and market models are emerging to challenge the status quo and to take advantage of the opportunities that cloud, artificial intelligence, tokenisation (to name but a few) can offer. At the same time, incumbents face pressures in the historically very low vol. environment. We enable both new and incumbent exchanges to navigate this rapidly changing world, align with their competitors and in many cases, even leapfrog their offerings. We see ourselves as agents for change, helping the industry to stay ahead and, ultimately, delivering better returns for end investors and exchange shareholders.
TM: Who are your clients?
Almqvist: We are proud to support a broad and widening spectrum of clients from traditional exchanges and alternative venues. Our clients come from sectors such as infrastructure bonds, futures and options, oil derivatives, stock exchanges, MTFs, SIs, dark pools and reinsurance to name some. New technologies – such as cloud, blockchain, artificial intelligence and machine learning – are challenging exchanges and trading venues, like never before. We help determine how they can align – even leapfrog – the best in the field. We believe in client choice. Some firms prefer to install Aquis Technologies on their hardware and/or infrastructures and handle their own full integration. Our technology team can design, develop and deliver a fully outsourced ‘licence only’ exchange for a firm to run by themselves. Alternatively, we can host and operate a client’s hardware and software on physical hardware or in the cloud, and even provide first-line surveillance operations.
TM: What makes Aquis Technologies different?
Almqvist: Our exchange technology includes a complete trading platform offering of matching engine, surveillance system, market operations and data services. Aquis Technologies provides highly flexible yet consistently rigorous modern proprietary systems. We are called upon by leading exchange champions who recognize the potential for new asset classes, market and liquidity models. They acknowledge the role that modern exchange and surveillance technology must play, and we are pleased to act as their change agents, design advisors and technology providers. We do this by delivering scalable and high-performance exchange, market data, market operation and real-time surveillance technology and services ideally suited to exchanges, MTFs, Systematic Internalizers, OTFs and broker crossing networks. Our technology is ideal for order quote-driven markets or for lit or dark books.
TM: Tell us more about your technology?
Almqvist: Our technology was developed entirely in-house by an experienced, UK-based team with a track record of building stable exchange systems. Take, for example, our Aquis Market Gateway (AMG) product… Our hub and spoke AMG, enables multiple bilateral message connections essentially in highly complex multilateral markets. We provide both a fast and consistently low latency service around the world with our Aquis Matching Engine, with port-to-port latencies of 17 microseconds or less for 99.99% of all messages, processing 170,000 messages per second, sustained and processed – the lowest in the industry.
TM: And what about surveillance technology?
Almqvist: We provide real-time multi-asset class surveillance, available as part of the complete exchange solution, or as a stand-alone offering. We offer transparency, insight and control empowered by visual graphic interfaces highlighting market and trading anomalies with real-time alert and notifications. It is designed to comply with major market abuse and conduct regulation. Easily scalable to handle cross-asset and cross-border trading requirements, our surveillance system will identify all the potential misdemeanors, including quote stuffing, wash trading, layering, pinging, and front running to mention a few.
TM: Can you give us some specific examples of how you are helping the industry?
Almqvist: With the increasing challenge the sector faces of how to tackle the huge data sets, combined with a landscape that is becoming more complex with margins shrinking, our clients often have to understand a lot more about IT using a lot fewer people than ever before. Added to this, investors’ timescale expectations on market returns have shrunk, wanting to see faster progress on their investments. We help our clients understand this more complex world and help businesses get a new asset class or new order type up and running very quickly.
Aquis is ramping up an R&D initiative in 2020, for example, with a well-known UK based university to investigate the capabilities of artificial intelligence and machine learning mainly within the surveillance and compliance space, and see if it can support compliance officers making faster and more accurate decisions when analyzing trading patterns. This is hugely exciting and can generate efficiencies and also increase the work satisfaction of compliance officers when supported by their tools in a much better way than with traditional technology.
We are also working with “applification” of complex mission-critical components, such as trading engines. That is, clients are expecting to be able to connect to the non-custom product, run in the cloud and accessed via public internet, within weeks of signing a contract; indeed they want early adopter clients to be live on the platform a few weeks later. For incumbents used to year-long delivery projects of matching engines, this is quite a shock to the system. It fits hand in glove for Aquis Technologies, and we’re excited to engage with prospects where we actively prototype and showcase using a standard cloud run matching engine for prospects to connect to and familiarize themselves with our technology, and they can comfortably go live as and when they feel ready.