Global Liquidity Centers White Paper

8/3/2019 Global Liquidity Centers White Paper

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Going Global:Fast, amiliar and exible access to growing markets


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Table o Contents:

Introduction ..................................................................................... 2

Current Landscape and Trends ........................................................ 3

The Opportunity ............................................................................... 4

Overcoming the Barriers to Entry ...................................................... 5

Advanced Technology and Robust Support ....................................... 6

Comparison o Deployment Times..................................................... 7

Core Services ................................................................................... 7

Signi cant Advantages or Market Participants .................................. 9

Summary ........................................................................................ 10


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IntroductionIn an increasingly global world, with high requency trading andcolocation still holding a meaning ul percentage o trading, whatare the next steps or customers who want to look beyond thehorizon? In this white paper, NYSE Technologies puts orward itsvision or the capital markets community by creating Global LiquidityCenters in nancial hotspots to allow a broad spectrum o marketparticipants to explore the great opportunities o the worlds astest

growing trading venues.

With little capital expense and a minimal learning curve, rms can nowtrade in new markets using the same so tware they use right now inlocal markets. Requiring no long-term commitments, Global LiquidityCenters uel your growth by reducing the cost, time, and expertiserequired or co-located trading in rastructure.

Global Liquidity Centers | 2


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Current Landscape and Trends

Sell-side rms are squeezed between the client demands to trade on more globalexchanges and the substantial capital and human resources required to ul ll thosedemands. Many o the largest buy-side participants have accepted the limitations oaccessing promising markets exclusively through their brokers. Those who venture

orth nd that in rastructure costs cut into trading pro ts.

In an e ort to meet the demand or a more a ordable and fexible way to trade inproximity to global markets, NYSE Technologies is launching Global Liquidity Centers a ully hosted trading in rastructure on servers in key data centers - on which

customers can place their trading algorithms and other so tware. From there, they canreceive market data rom all local markets via hosted market data connectivity, andsend orders back to those same markets.

I this all sounds amiliar, its because it is. Every Global Liquidity Center o ers accessto the exact same set o products and services NYSE Technologies customers alreadyuse in our Mahwah and Basildon Liquidity Centers. There is no technical learning curveto a new market. Once youve used one Global Liquidity Center, you can use themall. Perhaps most importantly, all Global Liquidity Centers are supported by the sameteams that design and support the worlds largest trading plat orms.

Over the past decade, nancialinstitution operating models haveradically changed. Organizationshave become more operationallye cient and expanded globally,and the level o automation has

been relentless. From mostlydeveloping asset class andgeographically siloed enterpriseprocessing and trading solutions,institutions have migrated towarda customer-centric, distribution-

ocused philosophy, attemptingto put as much technology withinclients grasps as possible.

- Larry Tabb,

writing in Wall Street Tech, 9th Sept 2011

3 | Global Liquidity Centers


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The Opportunity

While the major markets - such as the NYSE Euronext markets in New York and London- still garner a huge percentage o global trading volume, the rest o the world is rapidlycatching up, providing outstanding new opportunities to nd liquidity and deploy newtrading strategies. Until now, however, it has been di cult to trade in proximity to thesemarkets cost e ectively without making long-term commitments... o ten a greaterinvestment than volumes can justi y.

Some less travelled markets are experiencing great growth

-20%

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However, the absolute value is smaller.

Source: Electronic Order Book Value (Jan 1 Feb 28 2011/ 2010), World Federation o Exchanges

Source: Electronic Order Book Value (Jan 1 - Feb 28 2011), World Federation o Exchanges



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Overcoming the Barriers to Entry

Many rms would like to explore the opportunities o proximity trading on ast growingglobal markets, but considerable barriers to entry stand in their way. NYSE TechnologiesGlobal Liquidity Centers overcome these barriers, providing both buy-side and sell-sideparticipants with ast, a ordable, and fexible market access.

Complications o Market Participation Global Liquidty Center SolutionsLarge initial commitments:It typically requires an initial capital expenseto set up a co-located in rastructure and operate it

or a year.

Minimal initial commitments:By eliminating the capital expense, reducing recurringexpense, and providing fexibility o use, Global LiquidityCenters greatly mitigate the risks o entering a new market.

High fxed costs:There are many expenses involved in the costs osta ng, supporting, and constantly upgrading yourin rastructure cutting into trading pro ts.

Reduced operational costs:Compared to deploying your own technology, a LiquidityCenter typically reduces your costs by 30%, so a tradingalgorithm can make 30% less money and still be pro table.

Procurement and installation delays:It can take up to six months to plan a deployment,contract space and circuits, purchase and shipequipment, and clear customs.

Fast Deployment:Global Liquidity Centers can have you deployed inapproximately a month rom contract signing.

Support and maintenance:Electronic trading in rastructures are inherentlycomplex. There are equipment and so tware upgrades,monitoring, sta ng support, contracts, market dataentitlements, etc. It can be di cult to nd quali edsta , and your internal sta may lack capacity to takeon new deployments.

World-class support:Global Liquidity Centers are deployed and supportedby the same team that builds and maintains the worldslargest markets. We keep your in rastructure up-to-date,operational, and secure.

Researching locations:Comparing the eatures, services, and costs o datacenters in a given region can take considerable timeand e ort

Located at the best sites:Global Liquidity Centers are in the best data centersin each region we enter. We provide colocation withexchanges while maintaining your ability to trade onmultiple markets.

Lack o local knowledge:Every market has its own regulations and tax regime,and it can be di cult to know what you dont know -e.g. the BM&F Bovespa equivalent o triple witching orthe Russell rebalance.

Market primers:NYSE Technologies partners with independent analysts toprovides market research primers giving an overview olocal market structures, tax issues, and regulations.

Lack o Flexibility:Brokers o er some customers collocation services.However, our customers pre er a broker-neutralsolution, preserving at least an aura o fexibility.

Broker access to prime sitesOur sites our broker neutral, so you can engage multiplebrokers or simply swap. This may help contain operationalrisk and negotiate more avorable brokerage ees.

Technical learning curve:It can take a considerable amount o time and e ort tolearn the ins and outs o new technology services oreach o the markets you enter.

Familiar and consistent services:Familiar services, consistent rom market to market,eliminate the technical learning curve. In each LiquidityCenter NYSE Technologies can roll-out the sametechnology services you may already use today:

1 . SuperFeed2. Cloud/Compute On Demand3. RMG



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Advanced Technology and Robust Support

Our Global Liquidity Centers are concentrated versions o the Liquidity Centers inMahwah, New Jersey and Basildon, U.K.; using the same equipment and supportteam. In many cases, the exchange uses the same technology - so the integration iseven tighter.

Large scale

Full resiliency

10 Gig Ethernet in the Liquidity Center

State o the art multi-core servers or automated trading and up-to-datelibraries or market data

Excellent Support

Call your support contact or services in any o our Global Liquidity Centers. Onepoint o contact. One team. One exacting set o standards

Monitoring

Problem resolution

Change control

Capacity planning



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Comparison o Deployment Times

Global Liquidity Centers can be deployed three times aster

DIY

Design technical solution

Determine support model

Procurement

Installation

Testing

Pilot

Liquidity hub

Procurement

Installation

TestingPilot

M o n t h

1

M o n t h

2

M o n t h

3

M o n t h

4

M o n t h

5

M o n t h

6

M o n t h

7

M o n t h

8

VS



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Core Services

The Global Liquidity Centers are built using the exact same technology used to tradeon the NYSE Euronext markets today, so theres no need to start rom scratch learningnew technical nuances or each new venue whether it be TSX, Alpha, Pure, TSE, OSE,Chi-X Japan or HKEX.

Services available in NYSE Technologies Global Liquidity Centers:

Compute on Demand (COD)Compute on Demand o ers dedicated, managed blades with pre-provisioned accessto markets and application services. Windows and UNIX machines are available,both with local storage. Designed to host algorithms and supporting so tware, CODcustomers access their machines via SFTI to load various so tware and con gurations.You can load so tware via le trans er, and con gure and monitor via a TCP session orremote VPN. Customers are encouraged to take blades in multiple sites or resiliency.

Risk Management Gateway (RMG)

Risk Management Gateway o ers a sponsored, risk-managed gateway or orderfow. It gives broker-sponsored participants the connectivity and technology needed

or high-per ormance, pre-trade risk- ltered access to trading venues. Sponsoringbrokers receive a comprehensive picture o their clients risk pro les, and can controland monitor their clients risk limits via real-time, web-based GUIs or APIs. RMGalready inter aces to NYSE and NASDAQ today handle heavy order fow, while addingonly microseconds o latency.

SuperFeed TM

SuperFeed TM is a ully managed, hosted market data eed service. It greatly simpli esthe delivery o market data rom global venues, reducing latency and decreasing costs.The customer is reed rom buying and operating the extensive hardware, so tware,and networking required by an in-house market data in rastructure.

Customer software

Compute on Demand

Customer software

Colocation Service

Customer software

Customer Data Center

Sponsored access(RMG)

100 microseconds

FIX Order Routing(Marketplace)

Local Markets

Remote Markets

Hosted Real TimeMarket Data(Superfeed)

100 microseconds

FIX Orders

FIX Orders

MAMA Mkt Data

Orders

Orders

Market Data

Market Data

NYSE Technologies services available in the Global Liquidity Center



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Marketplace

NYSE Technologies Marketplace allows our global community o 1,200+ buy and sell siderms to send and receive trade in ormation in real-time, with the connectivity model o

their choice. Marketplace combines integration into all popular OMSs, ast on-boarding,and world-class support to simpli y connection to 630 sell-side rms, exchanges, ECNs,and ATS venues globally. Marketplace handles all FIX versions and translation amongthem, while order routing enables customized FIX messaging, and support or allalgorithms.

PTP or microsecond clock synchronization

In some data centers there is no ability to deploy a GPS antenna. Even where you can,do you really want to? We use highly accurate PTP within our Liquidity Centers or clocksynchronization, and will soon be using GPS synchronization across Liquidity Centerswherever possible.

Signifcant advantages or all market participants

Global Liquidity Centers can help you meet client demands or low-latency access to deeppools o liquidity across multiple geographies and asset classes, all within a cost-e ective,fexible trading in rastructure with managed risk parameters.

Tier 1 Broker-Dealers

Even the most sophisticated internal technology teams can struggle to deploy andmaintain the in rastructure needed to meet the ull spectrum o client demands ona global basis. Global Liquidity Centers take the struggle out o keeping pace withtechnology upgrades and support, and enable you to replace xed overhead with a highlyfexible and scalable solution. They allow you to explore and expand in global marketswithout incurring large CAPEX investments.

Tier 2 Broker-Dealers

Global Liquidity Centers allow Tier 2, regional sell-side broker-dealers to keep pacewith larger institutions. Now you can easily sell new trading locations to your customerswithout enormous investment outlays.

Institutional Investors

Through Global Liquidity Centers, hedge unds and other institutional investors nd acost-e ective, broker-neutral plat orm or trading in rapidly growing markets. You canexplore new sources o liquidity and an expanded range o trading strategies withoutmaking expensive, long-term commitments to new markets.

Systematic Traders

Global Liquidity Centers provide high- requency system traders with ultra-low latencyaccess to the worlds astest growing markets. Faster deployment and low initial costsallow traders to get in and out o markets with relative ease, and lower recurring costsmake a broader range o algorithmic strategies pro table.



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Consistent, amiliar, and cost-e ective

NYSE Technologies Global Liquidity Centers are a response to customer requestsor a ast, amiliar, and cost-e ective way o trading in markets worldwide:

Minimal learning curve The same technology you use to trade onall NYSE Euronext markets

Rapid installation From design to launch in approximately a monthrom contract signing.

Easily scalable Start with a single blade; expand into a large deployment

Advanced technologies High-per ormance technology that powers low-latencytrading on major world markets

World-class support The same team that maintains the worlds largest markets

With no capital costs, a short learning curve, and exceptional fexibility, these GlobalLiquidity Centers will make it economically easible to dip your toe in a new market andsee i you can make it work. I you like the results, expanding is as simple as callingyour account representative. Using the same technologies in the same way, GlobalLiquidity Centers radically simpli y complex global trading, delivering a vast new realmo pro table opportunity.

For more in ormation, contact [email protected]



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www.nyx.com2011 NYSE Euronext All Rights Reserveddc/N11401/110926

About NYSE TechnologiesA division o NYSE Euronext (NYX), NYSE Technologies providesbroadly accessible, comprehensive connectivity and transactioncapabilities, data and in rastructure services, and managed solutions

or a range o customers requiring next-generation per ormanceand expertise or mission critical and value-added trading services.NYSE Technologies o ers a diverse array o products, services andsolutions to: the Buy Side, including order routing, liquidity discovery

and access to a community o over 630 Broker-Dealers and executiondestinations globally; the Sell Side, including high per ormance, end-to-end messaging so tware and innovative market data productsdelivered on the worlds largest, most reliable nancial transactionnetwork; and Market Venues and Exchanges, including multi-assetexchange plat orm services, managed services and expert consultancy.With o ces across the U.S., Europe, and Asia, NYSE Technologieso ers advanced integrated solutions or the global capital marketscommunity, earning the ability to power trading operations or manyo the worlds best nancial institutions and exchanges. For additional

in ormation visit: http://nysetechnologies.nyx.com

Documents

Global Liquidity Centers White Paper