Something or nothing? I guess it depends on one’s POV. I’m referring to today’s deadline for implementing SEC rule 15c3-5 – aka the Market Access Rule – which bans naked sponsored access. While parts of that rule – related to aggregated risk and covering fixed income securities – now do not need to be complied with until November, the big part covering pre-trade risk for individual trades is now in force.
I kind of expected more fanfare today but it didn’t come, suggesting to me that most, if not all, have figured out a way to comply – whatever compliance means because as written the rule is pretty vague. Expect that to lead to some issues down the line as it’s determined that not all pre-trade systems have been created as equals. Which will also explain – in part at least – why some will have less latency as others.
We have seen a couple of announcements this week – from Nomura and ConvergEx’s RealTick unit – on enhancements to the firms’ order execution systems, with particular reference to pre-trade risk checks and how fast they are. And this morning I had a nice chat over coffee with George Salemie from RedDotNetworks, who is excited that his company’s FPGA technology has been adopted by firms (which he is not naming) to run checks in the nanosecond timespan.
[As an aside, RedDotNetworks isn’t the only adopter of FPGAs for pre-trade checks – Nomura cited their use in its announcement, and last month Fixnetix launched iX-eCute, which can process more than 20 pre-trade checks in less than 100 nanoseconds.]
Oh, and also there was a tiny acknowledgement of the new regulation at Nasdaq OMX, where Ted Myerson and Gary LaFever from the exchange’s Ften unit rang the opening bell at the Times Square MarketSite. Shameless self promotion maybe, but at least it was something!
So somehow, what I had pegged as a momentous occasion seems to have taken place without much celebration or acknowledgement. Not even a peep from the SEC. Perhaps they’re lying low, waiting for the fallout. It’s gonna come, methinks.