The Content-Aware Network

Black box and algorithmic trading platforms requiring high speed and multiple market data feeds are constrained by high-latency in-house ticker plants. Firms requiring FIX connections to hundreds of counterparties and multiple venues are constrained by the complexity of today’s VPN and hub-based solutions. The SEC’s Regulation National Market System (RegNMS) and the EU’s Market in Financial Instruments Directive (MiFID), compound the problem by requiring best-possible-terms trading and strict maintenance of audit trails.

Traditional approaches to these challenges—faster software, and more middleware, servers and staff—are not the answer. They drive up capital and operating expenditures, while restricting performance and scale.

For the right mix of embedded intelligence, speed and scale, financial services firms are looking to a new solution - the content-aware network. Its innovations can confer trader advantage—and respect the bottom line.

The Content-Aware Network

A content-aware network overlays existing IP infrastructure and does what IP routers can’t: filter, forward and transform inter-application messages based on their content. It moves application logic and business rules into the network to help customers build a more nimble, intelligent infrastructure (one that identifies content) routes it efficiently and reduces latency.

The Role of the Service Provider

While many enterprises build their own content-aware networks, others focus on their core businesses and engage service providers to provide and manage them.

Service providers are under pressure to offer more valuable services. Content-aware, application-enabled networks are helping them reach this objective. With only small capital investment, the networks offer the application-layer services their clients need—including market data delivery, network FIX, regulatory compliance or an extended ESB/middleware infrastructure.

Market Data Delivery

A content-aware market data delivery infrastructure offers a peer-to-peer architecture with a single application interface and no customer premise ticker plant. Data travels to the client site without passing through a point of consolidation that slows down automated trading engines and eliminates trading advantage.

Content-aware network hardware aggregates and filters market data from multiple exchanges so that only the symbols needed by traders flow (in a consolidated data feed), to the customer site. Network hardware transforms data so that it conforms to corporate standards and feeds it directly to the black box and algorithmic engines.

Processing in network hardware eliminates the need for an in-house ticker plant. This saves valuable milliseconds that can be spent processing data, taking in new data feeds or executing trades faster. Network processing also cuts network costs. A single consolidated feed ends the need for point-to-point connections to each exchange. It also reduces overall IT costs by eliminating the need to maintain a ticker plant and other complex infrastructures that feed automated trading engines.

Filtering rules can be changed by traders or automated trading platforms in real time to adjust to changing strategies or market conditions. New exchanges or symbols can be added, others dropped and all data can be normalized to a new corporate standard simply by issuing commands to reprovision the network, without touching the underlying enterprise IT infrastructure.

The flexible, low-latency delivery of market data as a managed service is becoming a fundamental capability of service provider networks.

Network FIX

The content-aware network’s peer-to-peer architecture lets service providers offer a single-source, integrated order routing solution that includes network access, network embedded FIX engines and a distributed message bus. FIX experts can be employed to manage the solution and resolve network access or connectivity issues. Moving business logic onto the network enables central management of trading, routing and security rules. It also supports the low-latency requirements and the high-traffic volumes generated by the largest broker-dealers.

Firms can connect to multiple counterparties through a single connection to a FIX engine in the service provider’s network. Integrated statistics and real-time transaction monitoring capabilities provide massive scale with low latency. No complex mesh of sessions or leased lines needs to be maintained. Sophisticated content filtering minimizes trading errors by checking for out-of-bounds prices, regulatory compliance and unknown tickers. And message logs provide a non-repudiation audit trail.

Multiple FIX engines distributed across the content-aware network can provide much higher scale than a traditional, hub-based FIX connectivity service implemented in a data center. A distributed approach allows FIX engines to be located so as to achieve a single-hop network transit with the lowest possible latency.

And for firms looking to shed the internal FIX support burden while retaining FIX connectivity to external counterparties, JMS/middleware access to network-embedded FIX Flyer engines provides a migration path to the next generation of Java-based applications that do not require an in-house FIX engine. The content-aware network acts as a high-speed distributed message bus, transparently routing messages to the network-embedded FIX engine that supports the destination counterparty.

Regulatory Compliance

A compliance-aware network is a content-aware network. With intelligent routing and networking, every message that flows through the system can be tracked and managed to ensure full compliance with RegNMS or MiFID standards.
Such a network supports full visibility into identities, order, pre- and post-trade data, and best-execution information. Beyond compliance, the business benefits of this approach include scalability, added services and, ultimately, competitive advantage.

In Summary

Content-aware networking hardware helps reach beyond the constraints of traditional solutions. Its high-speed infrastructure yields sustainable competitive advantage by moving information faster while lowering network system complexity and costs.