Transforming financial markets: How FIA Tech built the Trade Data Network on AWS

This post discusses how FIA Tech, a leading technology provider for the exchange traded derivatives (ETD) industry, built the Trade Data Network (TDN) on Amazon Web Services (AWS). TDN is an industry initiative that provides a shared ledger of trading information to address the fragmentation and lack of transparency in ETD post-trade processing. The TDN initiative currently includes 17 banks/brokers and 40 investment managers and hedge funds with combined assets under management of more than $34 trillion.

FIA Tech, owned by a consortium of 12 leading clearing firms and the Futures Industry Association (FIA), is committed to serving the industry and launching innovative solutions to improve market infrastructure across the listed and cleared derivatives industry. FIA Tech works in close partnership with the broader industry, including exchanges, clearinghouses, clearing firms and other intermediaries, as well as independent software vendors (ISVs), buy-side firms, and end users to bring efficiency to the exchange traded and cleared derivatives industry.

The market problem

The market infrastructure of exchange traded derivatives is surprisingly archaic. Recent periods of extreme market volatility, such as those triggered by the COVID-19 pandemic, the Ukraine war, and the collapse of Silicon Valley Bank, have consistently exposed critical weaknesses in the market infrastructure. These events have particularly highlighted deficiencies in clearing and allocation processes, especially in how sell-side firms allocate trades on behalf of their buy-side clients. The industry’s ability to handle such stress events efficiently has been found woefully inadequate, underscoring the urgent need for technological advancement in this space.

The solution

TDN aims to address this problem and takes a unique and far-reaching approach to solving the market’s concerns regarding the need for operational resiliency, the lack of transparency, and market fragmentation within the trade lifecycle.

Backed by a consortium of banks, with active support from banks/brokers, hedge funds, and asset managers, and connected to more exchanges and central counterparty clearing houses (CCPs) than any other solution, TDN is the industry’s first successful initiative that integrates post-trade data from executing brokers, CCPs, clearing brokers, and clients in real-time.

TDN provides market participants with a unified, permissioned ledger of trading information that is accessible, easy-to-use, and transparent. Post-trade processing is improved, clearing delays are minimized, and costs are reduced with TDN by identifying bottlenecks and resolving them, while ineffective repetitive reconciliation processes are limited, or even eliminated.

Key to TDN’s success is its ability to ingest data from disparate data sources and seamlessly correlate it into a single trade lineage from start to finish. By working directly with the leading ISVs and data providers, TDN allows each market participant to seamlessly interoperate using their own trading and clearing systems. Although TDN is based on industry standards such as FIX, FIXML, and the Futures Industry Association’s DMIST (Derivatives Market Institute for Standards), participants can easily integrate and normalize their data through the TDN Gateway infrastructure, and communicate seamlessly with other market participants with little or no need for additional reconciliation processes.

Standardizing and normalizing the data allow for breaks to be handled immediately, without further intervention by brokers or CCPs reducing the frequency of interventions at a level far surpassing any other market solution. And when breaks do need additional intervention, TDN’s collaborative approach to communication between counterparties has simplified a previously complex process by allowing firms to communicate and share details of trade breaks, view and annotate them, and complete break resolution in real-time.

Benefits to the TDN customers include:

• Data standardization and integration: A centralized platform reduces fragmentation and standardizes data formats, enhancing data accuracy and consistency.
• Scalability and performance: The AWS Cloud infrastructure offers unparalleled scalability, allowing TDN to handle large volumes of data without performance degradation.
• Cost efficiency: This reduces the costs associated with maintaining legacy systems and manual processes by automating workflows and using cloud-based solutions.
• Enhanced security and compliance: AWS provides a secure environment with robust controls and tools to make sure of data protection and regulatory compliance.
• Faster time to market: Streamlining data management and integration allows customers to accelerate post-trade activities and respond quickly to market changes.

Success is measured through several key performance indicators (KPIs), including:

• Reduction in operational costs and reconciliation: Tracking cost savings from reduced manual processes and legacy system maintenance.
• Data accuracy and standardization: Measuring improvements in data accuracy and the reduction of errors or discrepancies in T0 and T+1.
• Customer satisfaction and adoption rates: Gauging customer satisfaction through surveys and monitoring the adoption rate of the solution across different financial institutions.
• Time to market: Assessing the speed and efficiency of post-trade processing as compared to pre-implementation benchmarks.

FIA Tech currently uses a broad variety of AWS features to make sure of scalability, security, and reliability. The platform spans multiple AWS Regions and Availability Zones (AZs) to make sure of maximum feature integrity and client uptime. One of the key factors behind the success was the ability to scale on demand. Using AWS services such as Amazon Elastic Kubernetes Service (Amazon EKS), allowed for automatically adjusting the number of pods based on traffic and workload demand. This dynamic scaling made sure that performance remained consistent even during peak times, allowing FIA Tech to handle surges in traffic efficiently without manual intervention. Furthermore, FIA Tech used Amazon Relational Database Service (Amazon RDS) for seamless replication across key components such as Amazon Managed Streaming for Apache Kafka (Amazon MSK), PostgreSQL, and Amazon Simple Storage Service (Amazon S3). This enabled high availability, durability, and resilience of data across different environments. The Amazon RDS built-in replication features allowed for setting up failover systems and maintaining synchronization between data sources without needing significant manual effort.

After seeing the collaboration, Yossi Leon, CTO of FIA Tech, said, “The AWS subject matter experts provided invaluable guidance and real-world experience. Their expertise allowed us to design an architecture that was not only scalable but optimized for performance. This saved us time by enabling us to avoid reinventing the wheel and instead build on proven AWS patterns.”

Users of TDN have been vocal in their support for the initiative. The Operations Manager of a large London based fund said: “FIA Tech are building modern industry infrastructure which meets the needs of the Industry. Others are frankly lacking. This is the middleware the futures industry has needed for years”

Another large buy-side user commented: “TDN’s capability to normalize reference data has been instrumental in minimizing the number of false positive breaks. By ensuring consistency across our trade data, we’ve significantly improved the accuracy and efficiency of our reconciliation process.”

Through the Trade Data Network, FIA Tech is fundamentally transforming the exchange traded derivatives industry. By using the robust infrastructure and innovative services of AWS, TDN addresses long-standing challenges in post-trade processing, bringing unprecedented efficiency, transparency, and resilience to the market. This transformation not only benefits individual market participants but also strengthens the entire financial ecosystem, enabling faster, more secure, and cost-effective operations. As FIA Tech continues to innovate and expand TDN’s capabilities, it remains committed to driving positive change and delivering tangible value to its customers in an ever-evolving financial landscape.