Evolution in Exchange Technology: The Arms Race Continues (Strategic Focus)

Published by: Datamonitor

Published: Oct. 2, 2009 - 35 Pages

Table of Contents

Overview

Catalyst

Summary

Key Messages

More competition among trading venues is on the way

Investment in exchange technology continues apace

Trading venues have become technology vendors too

Latency and throughput drive matching engine development

Market surveillance has to keep up with faster matching engines and greater order volumes

Clearing relies on risk management; settlement is about managing multiple accounts

Opportunities for technology vendors differ from small to large venues

Table of Contents

Table of figures

Table of tables

MARKET OPPORTUNITY

More competition among trading venues is on the way

Investment in exchange technology continues apace

Trading venues have become technology vendors too

Technology Evolution

The driver in exchange technology is to do more in less time

The drivers for matching engines are latency and throughput/scalability

Market surveillance systems need to keep up with the matching engines, multiple assets and venues

Clearing and settlement require good risk analysis and records management

Opportunities for technology vendors differ from small to large venues

There are also opportunities to sell surveillance technology to regulators

Customer Impact

Latency and throughput drive matching engine development

Hardware acceleration has not made it into matching engines

Market surveillance has to keep up with faster matching engines and greater order volumes

Clearing relies on risk management; settlement is about managing multiple accounts

Competitive Landscape

Trading venues which develop and sell their own technology

NYSE Euronext

NASDAQ OMX

Deutsche Börse Group

London Stock Exchange

Financial Technologies (India)

Chi-X Global

ISVs offering exchange technologies

Cinnober

Patsystems

Smarts Group

Progress Software

List Group

Fidessa

Quod Financial

Go to Market

Recommendations

Determine which type of trading venue you want to target

Depending on the geography you target, you may need to put in local support staff

Smaller vendors may need to partner with a credible SI to win larger deals

APPENDIX

Definitions

Central counterparty (CCP)

Central securities depository

Dark pools

MiFID

RegNMS

Code of Conduct for Clearing and Settlement

Smart order router

Alternative trading system (ATS)

Electronic communication network (ECN)

Multilateral Trading Facility (MTF)

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Latency and throughput rates

List of Figures

Figure 1: How data flows in a trading environment

Figure 2: Market structure for clearing and settlement in the US and Europe

Abstract

• Exchange technology
• The business side of exchanges; M&A activity, etc..

• Gain an insight into how the exchange sector is evolving annd the role technology is playing in the process.
• See where the opportunities for independent tech vendors are in this sector.

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