Russia plans matching engine upgrade

The Moscow Exchange is developing a new matching engine, scheduled to be released in 2015.

The Moscow Exchange is developing a new matching engine, scheduled to be released in 2015.

The move is one of a number of new initiatives aimed at making the most of the recent merger of Russia’s two major exchanges – MICEX, known for its equities business and RTS for its derivatives.

“Moscow Exchange has plans to upgrade its trading technology by building a next generation cross-asset high performance trading platform that is expected go live in early 2015,” said Vahan Vardanian, managing IT director of Moscow Exchange. “Our existing trading technology is quite capable to handle the volumes and products in the meantime.”

Vardanian said rather than hiring a third-party provider to build solution, the primary reason for relying on its own resources was that Russia’s capital markets, historically not closely integrated with the global markets in the past, has been able to develop a number of proprietary solutions of its own. These include client level margining and risk management, as well as low latency pre-order validation that other markets are only now moving towards post the 2008 meltdown.

“Dismissing this knowledge and know-how would have been a mistake,” said Vardanian.

As a result of the merger between MICEX and RTS, Vardanian said the Moscow Exchange has ended up with an “extremely capable” team that can build and run complex systems.

“Having said that, we will however consider and evaluate third-party offerings in certain areas, where we believe they can strengthen and complement our own technical capabilities,” he said.

Ahead of the development of a new matching engine, Moscow Exchange plans to uproot the MICEX data center and join it with the RTS facility in the city’s ‘M1’ precinct – a former government research and development location where space rockets were designed.

“Moscow Exchange will centralise its co-location offering at the M1 data center that will also host matching engines of ex-MICEX markets – equities, FX, repo and bonds – before the end of this year,” said Vardanian. “Ex-RTS markets – namely FORTS market – will relocate there by Q2 of next year.”

Vardanian confirmed to that the MICEX technology will still be the platform of choice for cash equities and RTS for derivatives.

“We plan to leverage the functional strengths of our two existing trading platforms while addressing the needs to unify client access and clearing technology,” he said.

In response to growing interest and client demand for exchange colocation, Moscow Exchange has also expanded and enhanced its existing connectivity.

“The new product now features a dedicated co-location hall with flexible pricing options,” said Vardanian. “All our exchange data centers are already cross-connected and clients can leverage their existing connectivity to one of the data centers to get access to all of them.”

To cross-connect, Vardanian said clients needed to arrange their access to the exchange through two (for redundancy) of currently seven exchange authorised network service providers.

Earlier this year the exchange announced a move to T+3 clearing and settlement would happen by November. But recent communication from the exchange points to a later roll-out.

“We plan to release relevant T+n enabling technology to be tested by the market participants by end of the year,” said Vardanian. “All necessary trading and clearing rules will be finalised and published during this fall.”

Anna Kuznetsova, managing director of the exchange’s equities business sector, said “before the end of the year” the exchange plans to “view the test system”.