The Nanotick high-precision historical market data service developed by Onix Solutions (OnixS) and VDIware is to be extended beyond its initial scope as a service for the Chicago Mercantile Exchange (CME) with coverage of additional venues across Europe and North and South America due to come on stream next year.
The joint initiative was set up at the end of 2012 between OnixS, a London-based provider of direct market access software for algo trading firms, and VDIware, a Chicago-based infrastructure management company that supports high-frequency, ultra-low latency trading platforms at proximity data centres. The Nanotick data service for the CME – the Nanotick name reflects tick data in a nanosecond timeframe – has been running in beta test with clients on board since the start of 2013 and came to market early this month. OnixS provides sophisticated software for the solution and VDIware provides infrastructure in its space at the CME Aurora, Il. data centre to capture the data.
OnixS sees Nanotick as a natural extension of its directConnect range of direct market access solutions that provide venue specific access to a long list of venues including the CME, Eurex and IntercontinentalExchange. Commercial director Wayne Meikle explains: “OnixS directConnect solutions allow historical data to be stored and replayed, so quants can replay data and see what happened in the market. Being able to store and replay data within a firm is a feature of directConnect. Using Nanotick, firms don’t need to persist in storing data internally as Nanotick is an on-demand service that provides cost effective, high quality, easy to integrate and consume historical data. Users can avoid the costs of subsystems and storage for historical data and focus on trading rather than maintaining internal market data infrastructure.”
The Nanotick data service time-stamps every message using global positioning system hardware to deliver nanosecond precision. The captured data is then processed, but not normalised, to ensure the time and sequencing accurately reflects the state of the market. The data is stored across a number of data centres and traders can access it seamlessly, wherever it is, on a self-service basis using a web front end.
Four specific solutions are offered based on Nanotick technology: Nanotick Raw is wire-tap data that can be used to replay a trading strategy at an exact time; Nanotick Replay is a packaged solution for users of OnixS market data handlers and allows easy consumption of the data for back testing automated trading strategies; Nanotick BBO provides top of book data for CME traded products; and Nanotick Trades provides a view of trades occurring on specific instruments at specific times.
Meikle says: “Nanotick is a platform that trading firms can use to access data on request and then overlay analytics developed by their quants. It is designed for algo traders, often high frequency traders, but can also be used where latency is not so critical.”
The data service made its public debut at the Futures Industry Association Expo in Chicago early this month and Meikle reports interest not only from trading firms, but also exchanges. He says: “Nanotick has been developed first for the CME as it is natural extension of directConnect and because the CME is one of our most active trading venues. Our intent is to be a multi-venue source of historical data.’
He notes that some exchanges are more receptive to the idea of working with Nanotick than others and points out that exchanges that foster an eco system of services that use their data, such as Nanotick, will gain order flow from firms wanting to use the data services. Similarly, he notes that as Nanotick begins to work with data from multiple venues, it will become more attractive to trading firms.
The next addition of data to the platform is expected to be made early next year and is likely to come from a venue in South America. Nanotick has started to capture data from the venue, but needs at least three months of hisory before it can be introduced. Meikle says: “Our focus is not on venues that trade equities or foreign exchange. Our clients are asking for data around derivatives and commodities trading.’
To date, there are 10 customers on the Nanotick platform, some from the beta test and others that arrived later. Meikle is targeting 30 by the end of the year and to grow further from there. He suggests existing OnixS customers provide a natural client base for nanotick, but does not rule out prospects that do not use OnixS directConnect or data handlers.
In terms of competition, Meikle names no direct competitors. Instead, he says solutions such as CME’s Datamine, which provides access to CME historical data but does not provide high precision or self service, and similar services from other exchanges are complementary to Nanotick. He suggests other vendor services using CME historical data are predominantly normalised and designed for tick traders working in the retail market, which is not a sector Nanotick plays into.
Nanotick may be a nascent initiative, but OnixS has more maturity and Meikle has significant experience in financial services markets, currently serving as commercial director not only at OnixS, but also at C24 Technologies and Incept5. He joined OnixS in 2009, four years after its foundation in London in 2005. Its initial products were FIX engines that still provide a good market for the company and it has since added connectDirect. In 2009, connectDirect provided about 20% of revenue, but it now provides 70% to 80% of revenue and the company has grown to employ 25 people across bases in London, New York and Ukraine, where development operations are located. The Nanotick initiative is housed in OnixS’ London headquarters and is resourced, funded and staffed by both OnixS and VDIware.
Like OnixS, C24 is dedicated to financial services, but rather than focusing on the front office, it specialises in integration and standards-based messaging for the middle and back office. The company’s history has been chequered, with the C24 Integration Objects product sold to IONA Technologies in 2007 before IONA was bought by Progress Software in 2008. In 2011, C24 Technologies was formed to buy back the C24 Integration Objects product from Progress. Meikle says that after some slippage, C24 is rebuilding the brand.
His final interest, for the time being at least, is Incept5, which specialises in technology incubation and strategic change programmes both in the financial services sector and beyond. The three businesses operate as sister companies and all are privately owned with no recourse to venture capital and Meikle having an equity interest in each.