FTF News got time with Rocky Martinez, the CTO for the SmartStream RDU effort, which won Best Operational Risk Management Solution via the 2019 FTF Awards.
Rocky Martinez, CTO, SmartStream
(Editor’s note: SmartStream took home the award for Best Operational Risk Management Solution in this year’s FTF News Technology Innovation Awards competition for its Reference Data Utility (RDU) offering. Among its many aspects, the RDU provides a security master that was created “in close association with demanding global institutions,” according to SmartStream. The RDU is a combination of a data management platform and a managed service that populates the security master before the start of trading. FTF News got time with Rocky Martinez, the chief technology officer (CTO) for the SmartStream RDU, to discuss the utility approach and the architecture behind this key offering. Martinez became the CTO after seven years at SmartStream in solution architect and delivery manager roles. With more than 25 years of experience in financial technology, he oversees all product technology, innovation and product delivery. Before joining SmartStream, Martinez was the lead enterprise architect at MFX Holdings, where he managed IT.)
Q: How does the utility approach of the Reference Data Utility (RDU) improve the mitigation of operational risk?
A: The utility approach of the Reference Data Utility (RDU) mitigates risk in the following ways:
- As a utility, RDU consumes all of the relevant reference data from an exchange, data feed, order management system, and regulatory entity. RDU ensures quality checks are done for all consumed data. Ensuring all customers can benefit from a validated and correct feed. Operational risk is reduced because missing or invalid reference data will be corrected before it can cause trading outages or trade breaks. Trading outages and trade breaks expose an organization to unhedged trades, incomplete collateral, and erroneous trades.
- RDU provides the ability to cross-reference major market identifiers. Having the ability to ensure reference data is consistent between exchange and vendor feeds reduces the risks of integration between different enterprise applications.
- One of the issues with reference data is the ability to understand if the reference data for a security is complete and correct. Using RDU as a checker feed will ensure your primary data source is accurate. RDU can augment your primary feed with data that is missing to create a self-healing mechanism.
Q: What are the advantages of the RDU’s architecture and shared services model for managing data across legal entity, security, instrument, corporate action and pricing groups within a trading enterprise?
A: The main advantage of the RDU architecture and shared services is economy of scale.
When the RDU onboards a feed, it becomes available to the community in the same format, which is currently consumed by a customer. Therefore, a customer no longer needs to write any new feed handlers.
All new data is consumed just by accepting the new RDU feed data.
All customers are recipients of data changes and corrections, increasing efficiency at the customer.
Q: How does the RDU offering cut down on the volume of trade breaks and operational exceptions?
A: RDU cuts down on the volume of trade breaks in the following ways:
- Reference Data is validated, corrected, and normalized. Ensuring data is clean and complete.
- Reference data is augmented by our services staff to ensure all required data is presented properly in security reference data. Providing a reduction in trade breaks and exceptions
- Reference data is supplied as an entire exchange, removing the need for customers to wait on a trade while reference data is retrieved or
- Service staff apply corporate actions to facilitate early trading.
Q: What kinds of reference security data coverage does the RDU provide?
A: RDU provides data for electronically traded derivatives and equities. Fixed income support is coming by second quarter 2020.
Q: The SmartStream RDU has been integrated with FlexTrade’s FlexTrader execution management system (EMS) to offer clients the ability to embed SmartStream RDU’s Systematic Internaliser (SI) registry information directly into the send order ticket. Why did SmartStream do this? How has the joint effort been going?
A: RDU provided FlexTrade the ability to use the SI registry because it allowed FlexTrader users the ability to pick the best execution path.
The SI information is crucial in reporting as well. The effort is going well and we look forward to expanding.
Q: What can you tell us about SmartStream and RDU for the rest of this year and in 2020?
A: RDU is focused on initiatives to increase the ease of using our data.
Along with our traditional file delivery, we are going to start deploying API [application programming interface] access to all of our asset classes and augment SI registry with more API access. Our goal is to increase the speed of integration to the enterprise.
RDU looks forward to expanding the SI registry to more of the European community, to facilitate regulatory reporting.
Securities Financing Transactions Regulation (SFTR) is currently under construction and will be ready for use by the first quarter. In line with our ease of integration initiatives, API access will be available for early integration test.
And, finally, we’re adding fixed income to the utility.
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