Operational Risk Management Tool for Complex U.S. Equity Markets to Improve Electronic Trading Ecosystem
First Exchange Group to Deploy Next-Generation Solution for Improved Testing Standards
NEW YORK, Oct. 9, 2013 (GLOBE NEWSWIRE) -- The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) and Thesys Technologies LLC, the infrastructure affiliate of Tradeworx serving the high-performance technology needs of market participants, today announced plans to jointly launch a next-generation testing environment which will simulate trading on all major U.S. equities exchanges. The Algo Test Facility will provide the exchange group's electronic trading customers a safe environment to rigorously examine algorithmic strategies by replaying and interacting with real historical market data. The Algo Test Facility is expected to launch in the first quarter of 2014, and will provide customers a market-wide equities testing platform.
NASDAQ OMX's Algo Test Facility powered by Thesys Technologies will augment operational risk management efforts for the larger financial ecosystem, help to navigate testing within complex and interconnected U.S. markets, and better serve member firms that contribute to the exchange group's deeply liquid marketplaces. The Algo Test Facility will allow market participants to simulate their automated trading strategies against real-world scenarios, transactions, and competitors to manage their risk exposure and their capital expenditure. Unlike ordinary back-testing systems, the Algo Test Facility is designed to allow traders to test all aspects of their strategy from the quality of their quote processing, all the way down to order handling and the interaction of the trading algorithm with the market microstructure. By testing in advance, exchange customers may mitigate the risk of aberrant or potentially destabilizing behaviors like quote stuffing. In addition, the Algo Test Facility will provide traders with valuable insights about risk and performance, including the ability to evaluate the cost of adverse selection for specific trading strategies.
"In an environment where operational costs can burden traders who need to focus on alpha generation, we are committed to offer our customers cost-efficient broker services for areas like risk management and performance engineering," said Eric Noll, Executive Vice President of Transaction Services U.S. and U.K. at NASDAQ OMX. "These broker services make it easier for all market participants to achieve operational excellence. The Algo Testing Facility is another way NASDAQ OMX integrates sophisticated technology solutions as a means for participants to reduce risk exposure in a constantly evolving electronic marketplace and regulatory landscape," Mr. Noll added.
The Algo Test Facility will be accessible through the NASDAQ OMX Data Center, enabling customers to use their existing trading infrastructure, including risk systems, OMS and feed handlers. Each simulation will recreate market microstructure and provide an accurate view of adverse selection, time priority, fills versus misses, latency and bursting. The first phase of the Algo Test Facility will include simulations for the NASDAQ Stock Market, and over time the test system plans to support all major U.S. equities exchanges along with their order types and protocols so user activity may interact with the historical orders of other market participants. The Algo Test Facility is powered by a Thesys Technologies platform also used by major trading firms, stat-arb firms and the U.S. Securities and Exchange Commission.
"We are pleased to work with NASDAQ OMX to bring this revolutionary new capability to the market," said Manoj Narang, Chief Executive Officer of Tradeworx, Inc. "Currently there is heightened realization that the all market participants need to adequately test software that interacts with the market, and given how much trading volume is generated algorithmically today, the testing of these algorithms has to be a key component to the industry's efforts."
About Thesys Technologies:
Thesys Technologies LLC is the infrastructure affiliate of Tradeworx, serving the high-performance technology needs of market participants with the mission of democratizing the spread of top tier technology within the financial sector. Thesys offers the fastest and most comprehensive front-to-back trading solution on the market, putting investors and traders on a level playing field with the world's most sophisticated HFT firms. Thesys maintains a leadership position within the automated trading industry and its systems currently handle 4-5% of US Equities total daily trading volume.
About NASDAQ OMX:
The inventor of the electronic exchange, The NASDAQ OMX Group, Inc., fuels economies and provides transformative technologies for the entire lifecycle of a trade - from risk management to trade to surveillance to clearing. In the U.S. and Europe, we own and operate 26 markets, 3 clearinghouses and 5 central securities depositories supporting equities, options, fixed income, derivatives, commodities, futures and structured products. Able to process more than 1 million messages per second at sub-40 microsecond speeds with 99.99% uptime, our technology drives more than 70 marketplaces in 50 developed and emerging countries into the future, powering 1 in 10 of the world's securities transactions. Our award-winning data products and worldwide indexes are the benchmarks in the financial industry. Home to approximately 3,400 listed companies worth $6 trillion in market cap whose innovations shape our world, we give the ideas of tomorrow access to capital today. Welcome to where the world takes a big leap forward, daily. Welcome to the NASDAQ OMX Century. To learn more, visit www.nasdaqomx.com. Follow us on Facebook (http://www.facebook.com/NASDAQ) and Twitter (http://www.twitter.com/nasdaqomx). (Symbol: NDAQ and member of S&P 500)
Cautionary Note Regarding Forward-Looking Statements
The matters described herein contain forward-looking statements that are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about NASDAQ OMX's Algo Test Facility and NASDAQ OMX's other products and offerings. We caution that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ OMX's control. These factors include, but are not limited to factors detailed in NASDAQ OMX's annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. We undertake no obligation to release any revisions to any forward-looking statements.
Source:The NASDAQ OMX Group, Inc.; Tradeworx