DTCC has released the first in a series of big data products drawing on historical data to provide insights of use to the front office. Equity Kinetics provides institutional investors with a comprehensive depth of market view of activity across all US equity trading venues.
The product facilitates analysis of US equity market activity by providing a daily feed of trade data based on activity cleared through DTCC’s National Securities Clearing Corporation (NSCC) subsidiary, including historical data from December 2011 onwards.
According to Tim Lind, managing director of data services at DTCC, Kinetics aims to extract the collective value of data rather than any individual activity. “There are a number of use cases for this kind of content,” he says.
One is as an input for quantitative and algorithmic trading. “In the US markets, there are 11 registered exchanges and 44 different alternative trading systems. Under Reg NMS, the exchange market fragmented, but it comes together at one point and that’s the clearing stage; all of the clearing activity is handled by the DTCC’s National Securities Clearing Corporation,” Lind explains. “We’re in a natural position to see all of the equities trading activity, we can see aggregate buys, aggregate sells, short sell interest, concentration of liquidity across different CUSIP issues, as well as the sentiment on those securities. We can see the depth of market. We therefore see Kinetics as providing trading decision support and quantitative and algorithm model support.”
Lind notes that post-crisis regulation and the related focus on increased transparency through transaction and trade reporting have led to a surge in demand for data generated from financial market infrastructures like DTCC. “If the back office is to transcend its value from just processing trades faster, cheaper at a scale and wants to transition from a cost centre to a profit centre, data is the key to that transformation,” he says. “We’re taking the exhaustive data that the back office naturally creates, anonymising it, packaging it up to give an aggregate view of the market itself and feeding that back to the front office and trading environment as one input into their models.”
Equity Kinetics is the first iteration in a number of different products. “There are other content sets by asset class and originating source that we will package together in similar ways under the Kinetics product brand,” Lind confirms.