Transforming Financial Markets: How FIA Tech Built the Trade Data Network on AWS
FIA Tech, a leading technology provider for the exchange traded derivatives (ETD) industry, has built its Trade Data Network (TDN) on Amazon Web Services (AWS). This initiative addresses longstanding issues of fragmentation and lack of transparency in post-trade processing.
The TDN initiative currently boasts 17 banks/brokers and 40 investment managers and hedge funds, representing over $34 trillion in combined assets under management. Owned by a consortium of 12 major clearing firms and the Futures Industry Association (FIA), FIA Tech is dedicated to improving market infrastructure across the listed and cleared derivatives industry. Their collaborative approach emphasizes close partnerships with exchanges, clearinghouses, clearing firms, independent software vendors (ISVs), buy-side firms, and end-users.
The Market Problem
The market infrastructure of exchange traded derivatives has proven surprisingly archaic, particularly during periods of volatility like the COVID-19 pandemic, the Ukraine war, and the collapse of Silicon Valley Bank. These events highlighted critical weaknesses in clearing and allocation processes, especially in how sell-side firms allocate trades for their buy-side clients. The industry’s ability to handle such stress events has been widely deemed inadequate, exposing the urgent need for technological solutions.
The Solution: Trade Data Network (TDN)
TDN aims to address these issues with a unique approach, solving concerns regarding operational resilience, transparency, and market fragmentation within the trade lifecycle. Its core strength lies in its ability to integrate post-trade data from executing brokers, CCPs, clearing brokers, and clients in real time. TDN is the industry’s first successful system of its kind, combining data from multiple sources. Backed by a consortium of banks, supported by banks/brokers, hedge funds, and asset managers, and connected to more exchanges and central counterparty clearing houses (CCPs) than any comparable solution, TDN provides participants with a unified, permissioned ledger of crucial trading information.
TDN provides market participants with a unified, permissioned ledger of trading information that is accessible, easy-to-use, and transparent. Through identifying and resolving bottlenecks, minimizing clearing delays, and reducing operational costs, TDN streamlines post-trade processing. TDN’s capability to ingest data from disparate sources and correlate it into a single trade lineage is key to its success. Working directly with leading ISVs and data providers enables smooth interoperability for each market participant using their own trading and clearing systems.
TDN is built on industry standards like FIX, FIXML, and the Futures Industry Association’s DMIST (Derivatives Market Institute for Standards). Participants can easily integrate and normalize their data through the TDN Gateway infrastructure and communicate seamlessly with little or no need for additional reconciliation. This standardization allows for immediate handling of breaks without broker or CCP intervention, significantly reducing the frequency of interventions compared to other market solutions. In instances where additional intervention is needed, TDN’s collaborative communication approach allows firms to share details of trade breaks, view and annotate them, and complete break resolution in real-time, simplifying a previously complex process.
Benefits of TDN
- Data Standardization and Integration: Centralized platform reduces fragmentation for improved data accuracy and consistency.
- Scalability and Performance: AWS cloud infrastructure enables large-volume data handling without performance degradation.
- Cost Efficiency: Automation and cloud-based solutions lower costs by reducing the need for legacy systems and manual processes.
- Enhanced Security and Compliance: AWS’s secure environment ensures robust data protection and regulatory compliance.
- Faster Time to Market: Streamlined data management and integration accelerates post-trade activities, enabling quick responses to market changes.
Key Performance Indicators (KPIs)
Success is measured through several KPIs, which include measures of:
- Reduction in operational costs and reconciliation.
- Data accuracy and standardization improvements.
- Customer satisfaction and adoption rates.
- Post-trade processing efficiency as compared to pre-implementation benchmarks.
AWS Services in Action
FIA Tech leverages a broad range of AWS features to ensure scalability, security, and reliability. The platform spans multiple AWS Regions and Availability Zones (AZs) to provide maximum feature integrity and client uptime.
One key factor to their success was their ability to scale on demand using services like Amazon Elastic Kubernetes Service (Amazon EKS). This allowed for automatic adjustments to the number of pods based on traffic and workload demand, ensuring consistent performance even during peak times, without requiring manual intervention. They also use services like Amazon Relational Database Service (Amazon RDS) for seamless replication, including Amazon Managed Streaming for Apache Kafka (Amazon MSK), PostgreSQL, and Amazon Simple Storage Service (Amazon S3). This promotes high availability, durability, and resilience of data across different environments.
Industry Validation
Commenting on the collaboration, Yossi Leon, CTO of FIA Tech, noted, “The AWS subject matter experts provided invaluable guidance and real-world experience. Their expertise allowed us to design an architecture that was not only scalable but optimized for performance. This saved us time by enabling us to avoid reinventing the wheel and instead build on proven AWS patterns.”
TDN users also strongly support the initiative. An Operations Manager of a large London-based fund stated, “FIA Tech are building modern industry infrastructure which meets the needs of the Industry. Others are frankly lacking. This is the middleware the futures industry has needed for years.” Another large buy-side user commented, “TDN’s capability to normalize reference data has been instrumental in minimizing the number of false positive breaks. By ensuring consistency across our trade data, we’ve significantly improved the accuracy and efficiency of our reconciliation process.”
The Impact
FIA Tech, through the Trade Data Network, is fundamentally transforming the exchange traded derivatives industry by using the robust infrastructure and innovative services of AWS. By addressing long-standing post-trade processing challenges, TDN brings unprecedented efficiency, transparency, and resilience to the market. This transformation not only benefits market participants individually, but also strengthens the entire financial ecosystem overall, enabling faster, more compliant, and cost-effective operations. As FIA Tech continues to innovate and extend TDN’s capabilities, it remains committed to creating positive changes and delivering value to its customers in the ever-evolving financial landscape.
