TransFICC has launched a consolidated tape pilot for fixed income in Europe with the hope of becoming the technology provider of choice for the bloc’s recently announced plans for a unified data source.
Based on TransFICC’s existing hosted normalised post-trade data feed, the pilot has been developed as part of the regulatory sandbox operated by the Dutch Authority for the Financial Markets and is available to be tested by participants and regulators.
Speaking to The TRADE, Steve Toland, co-founder of TransFICC, said that as the pilot was based on existing infrastructure the time to market and costs for implementation would be significantly reduced, meeting key criteria set out by EU regulators such as high speed, efficient high-capacity data dissemination, low cost, resilience, modern interfaces for access, storage, and protocols to address an outage.
TransFICC connects to different fixed income trading venues, including Bloomberg, Tradeweb and MTS Markets, coding to their proprietary APIs and normalising data for buy-side clients.
The pilot tape publishes 30 fixed income trade “canned” post-trade messages per second from a test venue, round the clock, on instruments including rates, credit bonds and interest rate swaps.
Data will be contributed to the pilot tape via an API and it will be hosted in the cloud in Frankfurt and in Equinix hosting centres in London and Frankfurt. Each message has certain criteria as set out by what EU regulators have requested: including at which venue the trade was executed, its quantity, clearing location, time stamp, etc.
Alongside other technology providers and participants to join the AFM sandbox, TransFICC has now joined a working group that will be responsible for fleshing out an EU opinion on what they foresee the tape looking like.
The MiFID review
The development follows news in November that the European Commission will be pushing for a real-time post-trade consolidated tape for each asset class as part of its Capital Markets Union update.
“The EU published what they wanted the tape to provide and in light of what we’ve been building over the last few years, we think we meet some of those requirements. What we think we can offer with this is reduced time to market and we can build it at a lower cost than that which others might,” said Toland.
“We’d like to be the technology provider. Whether we should be the tape body is a different thing. There’s been questions about regulatory size of the organisation but we think we’ve got the technical capability for this, so whether we do it ourselves or someone else says we want to do it but TransFICC provides the technology is the question.”
Toland told The TRADE that TransFICC was pointed towards the Dutch regulator as many venues were now situated in Holland post-Brexit. According to him, there remain several questions for regulators to answer before the final implementation stage, including around deferrals and quality checks. However, TransFICC’s now live product will offer a tangible opportunity to answer them.
“We think we can answer some of those questions by running a pilot with something that feels like the real thing,” Toland added.
“We’ve built out a really simple way of connecting to the tape. Not everybody is a big venue and can build a FIX API. We want to demonstrate that we’ve got the engineering capability and we want to show that it’s easy to use and can be deployed quickly. The buy-side want this transparency but they are worried that it’s going to be an expensive service. We’re hoping to demonstrate that it needn’t be.”
Outages
A key requirement raised by regulators for a consolidated tape has been resilience, stating that a provider would have to have a clear plan of action in place in the case of an outage.
“We have global investment banks as customers now, it’s mission critical stuff. The whole system is designed with no single point of failure,” said Toland. “We run servers in clusters. There’s always a diverse path to any trading venue. It’s extremely resilient and then we have SLAs in place with each of our customers covering their monitoring system and how quickly we respond to outages. We’re pretty strong on that side.”
TransFICC will be asking users of the pilot tape to sign a non-disclosure agreement before they are granted access as the system as the API also covers RFQ workflows used in production.