FIA Tech to launch analytic service to simplify trading of index futures

New solution, created in partnership with exchanges and index providers, will help classify non-US indices for US firms.

FIA Tech has partnered with nine futures exchanges and five index providers to launch an analytics service that enables US trading firms and investors to better navigate complex regulations governing trading of non-US index derivatives.

Index futures with significant global volume have experienced classification changes over the past year, which unexpectedly required several US-based clients to offload positions and halt trading the products.

FIA Tech’s new analytics and data service will provide firms with a central source of validated data to use for non-US index classifications. In addition, the service will allow market participants to come to accurate, consistent determinations through the provision of consistent market data and analytics.

For firms to ensure that they remain compliant with regulations, clearing firms, buy-side firms and exchanges should be able to monitor the regulatory classification of index futures on a continuous basis.

The futures exchanges and index providers FIA Tech has partnered with include FTSE Russell, MSCI, Standard & Poors and Taiwan Index Plus Corporation.

The regulatory requirements of the joint Securities and Exchange Commission and the Commodities Futures Trading Commission jurisdiction over non-US index futures have led the classification of indices as “narrow based” or “broad based” to drive how and whether products can be traded by US clients.

“FTSE Russell is pleased to have worked with FIA Tech on this important derivatives industry initiative to create a consistent source of index information regarding non-US index-based FTSE Russell index linked derivatives,” said Ricardo Manrique, director, derivatives strategy, FTSE Russell.

“This new analytics tool will provide market participants with important insights to help them navigate the complicated regulatory landscape of global index futures.”

Exchanges including Nasdaq, B3, Tokyo Stock Exchange, TSX, BME Market Data, Tel Aviv Stock Exchange, Budapest Stock Exchange and Matba Rofex partnered with FIA Tech to design the service.

According to FIA Tech, the new service has been deployed to its existing reference data network to provide a validated source of data for use by each institution’s compliance teams.

“Uncertainty about the regulations and the complexity in performing the analyses could discourage use of these important products to manage risk or negatively impact liquidity,” said Nick Solinger, chief executive of FIA Tech.

“We are pleased to be working with the leading exchanges, index providers and global clearing firms on a solution for this industry challenge.”