Lime anticipates SEC sponsored access rule with new service

Agency broker and trading technology provider Lime Brokerage is rolling out LimeInside, an exchange co-located sponsored access service for high-frequency traders which the firm claims addresses the US Securities and Exchange Commission’s proposed ban on ‘naked’ sponsored access.
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Agency broker and trading technology provider Lime Brokerage is rolling out LimeInside, an exchange co-located sponsored access service for high-frequency traders which the firm claims addresses the US Securities and Exchange Commission’s proposed ban on ‘naked’ sponsored access.

LimeInside enables high-frequency trading firms to co-locate at major US trading venues without the potential for exceeding trading limits or violating other regulatory requirements imposed on the sponsoring broker.

The service integrates risk controls, order management, real-time market data and direct destination routing. A “non-intrusive” application programming interface sits within the client’s trading environment to minimise latency and maximise performance, according to Lime.

On 19 January the SEC proposed a ban on ‘naked’ sponsored access – where clients are allowed to trade directly on a venue using the broker’s ID without any broker risk controls. The SEC’s proposed new rule would require brokers offering market access, including sponsored access, to implement pre-trade regulatory and risk controls. The comment period for the proposal closes on 29 March.

Lime said that LimeInside satisfied both existing and anticipated compliance criteria for sponsored access. Features include pre-trade order validation, risk aggregation across venues, verification checks that prevent submission of orders if trading limits are breached and configurable human error checks.

The service also features optimised order management and delivery, integration with Lime’s Citrius real-time quote delivery system, a data-output shaping algorithm and protection of flow from information-leakage attacks.

LimeInside is currently available for a select number of firms that want sponsored access to the Nasdaq Stock Market, NYSE Arca and BATS. Additional markets will be added according to customer demand and availability of co-location facilities.

“Lime has long been a vocal proponent of rules preventing naked access and as an industry leader, we have created a solution that is consistent with regulatory mandates without sacrificing performance,” said Jeffrey Wecker, president and CEO of Lime Brokerage, in a statement. “Our pre-trade order validation is so fast, you will not only reduce your latency, but in many cases will see net-negative latency relative to your existing platform.”

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