Financial technology provider SunGard plans to develop pre-trade risk controls as its first project using software firm StreamBase’s complex event processing (CEP) technology.
SunGard has licensed StreamBase’s CEP technology to enhance the Assent Liquidity Solutions line of products offered through its Assent broker-dealer subsidiary in the US as well as its Brass order management system. The Assent solutions include smart order routing (SOR) and a non-displayed alternative trading system (ATS).
The decision to develop pre-trade risk controls using StreamBase technology was prompted in part by the US Securities and Exchange Commission’s proposal to require brokers offering clients direct access to exchanges, including sponsored access, to impose pre-trade risk checks. The consultation period for the proposed rule closed last Monday.
Pre-trade risk controls would involve validating incoming orders against market data, for example, to check for errors or anomalies. “You end up with a requirement for completing quite a complex set of calculations in a very short window of time, because you don’t want to delay getting the order to the market while using a lot of streaming data,” Chris Lees, vice president of liquidity services at SunGard, told theTRADEnews.com. “For us, that is the perfect sweet-spot for StreamBase’s event processing platform.”
Lees added that the launch of the new product is dependent on the SEC finalising its requirements for pre-trade risk controls. “We are hoping to have something ready for production in the fall or early winter of this year,” he said. “Other initiatives like enhancements to the SOR and the ATS will follow that, as defined by requirements.”
Once deployed beyond the new pre-trade risk tool, the StreamBase CEP engine could be used, for example, to add new routing strategies to SunGard’s SOR. “If we want to deploy a new way of sweeping dark or visible market centres then we might build that in StreamBase and have it alongside our existing SOR strategies,” added Lees.