Over the years, I have had the good fortune of working with some of the best engineering talent in the financial services industry on cutting edge, realtime platforms. A customer who led the way in the Capital markets space is FINRA. FINRA is a capital markets regulator that protects investors. The CAT (Consolidated Audit Trail) project was created as a result of SEC Rule 613 which requires FINRA and the national securities exchanges to jointly submit a National Market System (NMS).The audit trail that collects and accurately identifies every order across its trade lifecycle – cancellation, modification and trade execution for all exchange-listed equities and options across all U.S. markets.
The Capital Markets value chain encompasses firms on the buy-side (e.g wealth managers), the sell-side (e.g broker dealers) & firms that provide custodial services as well as technology providers who provide platforms for post-trade analytics support. The crucial link to all of these is the execution venues themselves as well as the clearing houses. With increased globalization driving the capital markets and an increasing number of issuers, one finds an ever-increasing amount of complexity across a range of financial instruments and assets (stocks, bonds, derivatives, commodities etc).
I was very happy to note that McKinsey did an interview with the FINRA executive in charge of this project [1].
By migrating to AWS, FINRA — the Financial Industry Regulatory Authority— has created a flexible platform that can adapt to changing market dynamics while providing its analysts with the tools to interactively query multi-petabyte data sets. FINRA is dedicated to investor protection and market integrity. It regulates one critical part of the securities industry – brokerage firms doing business with the public in the United States. To respond to rapidly changing market dynamics, FINRA moved about 90 percent of its data volumes to Amazon Web Services, using AWS to capture, analyze, and store a daily influx of 37 billion records.
FINRA runs hundreds of surveillance algorithms, over massive amounts of trade data, to uncover patterns of market manipulation, insider trading and other abuses. They do this across a peak volume of 600+ billion transactions every day.
From FINRA’s website (www.finra.org) – FINRA’s technology is vital to protecting investors—it has become a key component of our ability to:
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- effectively regulate more than 3,400 broker-dealer firms and nearly 620,000 registered persons
- accurately monitor the U.S. equities markets
- quickly detect potential fraud
- keep investors informed through tools like BrokerCheck
[1] Full Article here –
https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-benefits-of-being-a-cloud-trailblazer
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