Sun Microsystems is preparing to make a big splash at the SIA Technology Management show with its multiple messages around Reg NMS, bird flu, market data and best execution.
Even though the Securities and Exchange Commission (SEC) has pushed back the implementation dates for Reg NMS from June 29 until February of 2007, Sun Microsystems' core message revolves around "changing your trading room because your market infrastructure is changing," says Jeff Hong, Sun's global capital markets manager.
With the expected increase in market-data volumes anticipated from Reg NMS, Sun is highlighting its data management offerings, including storage, archiving, retrieving and securing data. "Since data is the core to a lot of the regulations," Sun is working with partners such as SASS and SunGard Brass as well as with Reuters RMDS 6.0, which has some new advanced features. In addition to running on Solaris 10, Sun's flagship operating system, RMDS routes market data into pre-trade and trade analysis, which is tied into Reg NMS as well as Sun's next-generation trading floor theme, notes Hong. The booth will also feature a demo by Lightstreamer (based on the AJAX-Comet paradigm), which will stream real-time data to an HTML browser without the need to download or install anything on the desktop client, updating the data on the screen without reloads.
Sun is also proposing that its offerings in storage and hardware can address Reg NMS and it's demoing solutions around the next-generation trading floor, suggesting that firms will need to retool their algorithms to do more-effective order routing, says Hong. Since broker-dealers will need to prove they delivered best execution under Reg NMS, Sun is showcasing and publishing research papers at its booth, showing there is a need for next-generation analytics that can allow broker-dealers to provide best execution. That entails "going through post-trade data and coming up with the analytics," says Hong. This involves crunching through post-trade data and coming up with analytics. Sun sponsored a proof-of-concept conducted by a think tank called Z/Yen in London, which was completed in December and applied post-trade analysis to identifying trade outliers. Z/Yen's algorithm is called Dynamic Anomoly and Pattern Response Systems (DAPRS).
Hong says Sun wanted to investigate the need for next-generation analytics to sift through and do pattern recognition analysis on hundreds of thousands of trades that a broker-dealer may conduct over the course of three months.
While the SEC's FAQ on Reg NMS advised the industry to capture about three days worth of data and told the industry that it would be randomly sampling the data, Hong says, "Customers are looking for correlations between the market data to give you the best price and then the trade data they actually executed at. You're going to have massive data sets. If you use normal algorithms, you're going to be flagging a lot of things," says Hong.
On the compliance front, Sun will highlight its relationship with Deloitte. The two companies announced a relationship back in February, forming the Center of Technology and Governance in Compliance. This draws upon Deloitte's best practices and Sun's technology to build a framework for updating systems and knowledge that cuts across all regulations including SarBox, Reg NMS and Basel II, says Hong.
Speaking of compliance, even though the Avian flu has abated, it is bound to flare up again, so Sun is touting the idea of Pandemic Preparedness as something that fits into business continuity. "You should be able to work from home, work off-site, even just go down to Wall Street," says Hong. While firms have moved staff to locations like Fort Lee in New Jersey or to Philadelphia, the next step is to work from home as well, he says. To support business continuity, Sun is offering OpenWorks, an open computing model based on the idea of having an open, secure and flexible environment at home.