Transforming Service Delivery – Through Functional Innovation and Cost Reduction

CUSTOMER

Equitec is a proprietary trading firm with market making and specialist operations on eight domestic exchanges, as well as a U.K. subsidiary that trades on electronic exchanges throughout Europe. The company trades primary and derivative instruments in various equity, index, financial, and structured products.

Equitec is a member of the Chicago Board Options Exchange (“CBOE”) and the Philadelphia Stock Exchange (“PHLX,” and together with the CBOE, the “Exchanges”). The company was founded in 2000 and is based in Chicago, Illinois with additional offices in New York, San Francisco, Philadelphia, and London.

CHALLENGE

Today’s electronic trading environments are ultra-competitive in speed and performance to gain edge for trade decisions and trade execution.

Trading in derivatives is one of the most complex disciplines within capital markets industry given the high market data rates and the multi layering of trading strategies based on multiple inputs with potential multiple outputs. As an example the most liquid equities such as Apple (AAPL) or FB (Facebook) have thousands of options with expiries over multiple years. Therefore one market data update on an underlying equity can cause the recalculation of thousands of options strategies.

SOLUTION

In developing a solution, a team from Neueda worked closely with Equitec to develop a new Futures and Options trading platform including:

  • A low latency/ high performance application
  • Trading algorithms
  • Trading systems operations
  • Flow Connectivity
  • Hybrid Manual Trading
  • Trading Algorithms: an algorithmic framework was developed
  • Automation Execution & Internalization
  • Trade Pricing
  • Trade Capture & Routing
  • Trade Lifecycle events
  • Market data
  • Order execution
  • Order management
  • Strategy deployment

APPROACH

A key factor in the success of the project has been the Neueda engagement model with Equitec. The Neueda team are based in Belfast but team leads communicate with the client in Chicago on a daily basis. Delivery of the solution from our Belfast location means solutions are consistently low-cost (when compared with London, New York or other major financial cities) and high quality; the education system and work force in Northern Ireland is considered to be world-class The Neueda team worked closely with the market maker using Agile methodology to rapidly develop and bring to market a comprehensive options trading platform. White-boarded requirements and design were translated into User Stories in the form of Jira tickets that were developed in 2 week sprints.

  • Single ownership of the project outcome;
  • All Neueda personnel are focused on their contribution to the project;
  • Delivery of technical best practices developed by the Neueda team across a range of industry sectors and customers; and
  • In-built mentoring and knowledge transfer to ensure that these best practices are transferred to the Equitec team and deliver sustainable long-term benefits.

RESULTS

From inception and initial design to first live trade was 7 months, achieving and often exceeding the latency and throughput requirements set out in the original system specification. The platform also consists of a market data infrastructure that can process millions of exchange messages per second at sub 10 microsecond latencies. A fully integrated order management system and execution venue system supporting both FIX and native binary protocols. The Design and implementation has been future-proofed ensuring that it can handle the fast paced dynamic requirements of trading; the flexible design and abstraction offered by the numerous frameworks means new venues can be added within weeks. The platform had an initial requirement for equity and option asset classes however further planned releases will extend this to support other classes including FX and Futures.