Industry Article - How to evolve a risk-based FPGA strategy into a value add strategy

Fixnetix is a leading managed service provider for the global financial community, with a team of highly skilled professionals tasked with developing and providing dynamic products and solutions to meet the ever changing requirements of the banking industry.

Dr Marcus Perrett, Director of Technology and Development, provides an insight into the use of FPGA technology in the finance industry.

How Fixnetix has evolved their risk-based FPGA strategy into a value add strategy 

The use of FPGAs in finance was originally driven by regulation. Brokers were encouraged (or mandated by regulation) to have controls in place to monitor and, if required, cancel or stop clients trading. As clients had traditionally enjoyed direct access to the market via a broker, a system that was positioned between a trading system and the exchange needed to be a fast as possible to reduce the impact to a client’s trading strategy. Hence, FPGA technology was employed to great effect in a number of configurations; some banks built their own systems and several vendors built their own.

Fixnetix has enjoyed success using that model in Canada, where regulation has driven the need for a low latency risk solution for latency sensitive clients trade flows via a broker.

However, regulation alone has not proven to be the only driving factor for the use of FPGA in the finance area. For example, in Japan, the native exchange (TSE) utilises a complex and verbose protocol called arrowhead. In addition, the rules around erroneous trades and protocol discipline are onerous and for potential new entrants into that market it can be a daunting task to overcome.

Several brokers have solved this issue by offering FIX to arrowhead translation services to allow easy and ubiquitous trading, the downside being that such systems are very slow due to the amount of processing required to perform the translation into arrowhead and even more so in generating FIX compliant messages in the return path; this requires Persistence (storage of incoming FIX tags for later use) and Enrichment (calculation of values not available in arrowhead message such as Average Price).

What did Fixnetix do?

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