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Architectures for Disparate Derivative Trading and Settlement

Architectures for Disparate Derivative Trading and Settlement. Paul Pickup Strategic IT Consultant Trading Technology www.tradingtechnology.com Andy Schneider BJSS www.bjss.co.uk. AGENDA. Introductions Business drivers affecting derivative trading Challenges faced by IT

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Architectures for Disparate Derivative Trading and Settlement

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  1. Architectures for Disparate Derivative Trading and Settlement Paul Pickup Strategic IT Consultant Trading Technology www.tradingtechnology.com Andy Schneider BJSS www.bjss.co.uk

  2. AGENDA • Introductions • Business drivers affecting derivative trading • Challenges faced by IT • Service orientated architecture • Case studies • Summary & Questions

  3. Trading Technology www.tradingtechnology.com • Note – Not Trading Technologies!!! • Specialists in Trading Systems • Consultancy, not development • People are the challenge, not the technology • Business analysis • Program and Project Management • IT Marketing and Research

  4. BJSS Ltd. www.BJSS.com • The highest quality software engineers • Bespoke development only • Financial services – especially trading environments • Messaging and high-availability transactional environments • Significant clients including the London Stock Exchange, LIFFE, CREST, Reuters, BP

  5. The business drivers

  6. Business Drivers • Recent survey of Stock Exchange Technology • Through FOW • Conclusions • “cash” trading high-volume low value • “Traders Market” • Expansion into derivative • instruments • IP-based technology enabler

  7. Business Drivers • Derivative business lines • FX and Money derivatives • Credit Derivatives • OTC Derivatives • Spread betting • Commodities • Energy • Weather….

  8. Demands on systems • Derivative traders are only as good as their IT! • Programmer/Mathematician/Derivative trader hybrid • Many small-point systems • Developed by traders • Excel • Access • Visual Basic

  9. Demands on systems • Demands of IT • Planning • Budget • Resourcing • Shared knowledge • Infrastructure • Need for control • Supportability • Centralisation • Demands of traders • Time to market • Profit window • Uncertain Revenues • Need for secrecy

  10. Business Drivers – The Problem • Or: • STATE CONTROLLED CENTRALISATION The problem is either: Baronial Anarchy

  11. Business Drivers – The Problem • Or: • STATE CONTROLLED CENTRALISATION The best of each world is: Baronial Anarchy • Flexibility • Speed of development • Low cost • RAD approach • Disposable systems? • Ability to plan • Clear agreed requirements • Budgets • Maintainability • Supportability • Fits in with other systems • Common development techniques

  12. Service Orientated Architecture

  13. The Balancing Act Dynamic Strategic Predictable Tactical Standards Large Scale Flex Small Scale Delicate balancing. One size does not fit all.

  14. Business Process Support Enable Buy & Build Cost Of Entry Scaleable Incremental B2B Ready Zero Latency Availability Linear Cost Support Diversity Key Design Principles Complex Trade Offs...

  15. Service Orientated Architecture ...SOA is a software architecture that starts with an interface definition and builds the entire application topology as a topology of interfaces, interface implementations and interface calls... [Natis, Gartner 2003] • Abstract Interfaces to Business Processes. • Leverage Existing Systems. • Ease integration of large systems (e.g. SAP). • Heterogeneous environments. • XML, simple protocols. • SOA is not web services, SOA is a design philosophy. Services are not just Web Services...

  16. Reference Data Repository Core Component API Reference Data Workflow Transformation Sequencing Human Intervention Messaging and Services Exposure Reporting Plain Text (XML) Message Bus Pricing Deal Entry Leverage mature message based architectures...

  17. Messaging Options • Bus or Hub/Spoke. • Federated. • Point-to-point or Publish & Subscribe. • Asynchronous or Request/Response. • Variable QoS. ... or combinations and variations of ...

  18. Transaction Transaction Transaction Transaction Transaction Transaction Transaction Transaction Transaction Options Process & Database Update Publish Message or Request Receive Message or Request Process & Database Update Publish Message or Response

  19. Other Considerations • Security • Control Costs With Threat Model • Authentication • Integrity • Privacy • Business Continuity • Availability • Disaster Recovery

  20. Top Level Business Unit Core Java Apps Communication Medium Communication Medium Communication Medium SAP Instance Communication Medium Ontologies Define globally, adapt locally

  21. Reference Architecture Application Services Deployment Services Persistence Security Load Balancing Clustering Data Access API Administration Deployment Audit/History Caching Process Automation Recovery Fail Over Workflow Rules Engine Reference Data Integration Meta Data Master Data Transformation Translation Monitoring Messaging Routing Event Bus Monitoring The Enterprise Service Bus makes much of this available…

  22. Case Study: Energy Trading & Scheduling System • Paper Deals • Options, Futures, .... • Physical Deals • Scheduling • Contract Generation • Many Legacy Systems

  23. Reference Data Repository Reference Data Mappings in Transformation Engine Core Component API Win2k COTS Solaris J2EE Reference Data Contracts SQL Server XML on TIBCO Certified Messaging Solaris J2EE Solaris J2EE Excel VBA Workflow Transformation Sequencing Human Intervention Scheduling Deal Entry Transaction Boundary Solaris TIBCO IM ORACLE ORACLE Case Study: System Evolution VMS ProIV Back Office

  24. Inextricably Entwined Architecture Technology Method Process Process and Architecture: entwined and generative

  25. 21st Century Development • There is no grand narrative. • Right people, right process, right time. • Method-per-project with agile philosophy. XP DSDM FDD RUP Waterfall TSP SCRUM Crystal Iterative JAD Spiral Method to fit goals

  26. Project & Programme Governance Industrial Strength Agility Tailor Finding Best Fit Execute } Measure Deliver Adapt Completion Commitment Iterative, adaptive, embracing change.

  27. Case Study: BalanceAgility and Governance • Before: • Large multi-national. • Waterfall style governance. • Chaotic, disconnected development. • After, process aimed at: • Optimising test and quality. • Improve transparency control. • Improve fit with governance.

  28. Case Study: Multi-Disciplinary Teams • Smooth resource usage. • Optimise for information flow. • Small, efficient feedback loops. Team A Analysis Best Practices Standards Quality Monitoring Development Functional Delivery Test People are key, have first order effect.

  29. Case Study: Transparency • Daily Defects - component based. • Defect State of Nation. • Graphs to programme team and on wall. • Monitored trends to ensure closure. • Progress • Planned, actuals EVA, variance and velocity. • Agreed iteration exit criteria. Transparency = Trust, Benchmarking, Clear Progress

  30. Case Study: Automate, automate... Continual integration and test build quality

  31. Case Study: Necessary & Sufficient • Design and Analysis is both an activity and communication. • Documentation is not an end in itself. • Focus on: • Necessary: Has a clear purpose. • Sufficient: Good enough for the purpose. Right level of detail. Necessary and sufficient - minimum needed...

  32. Case Study: Adapt • Iteration reviews. • Project Teams are Self Optimising. • Holistic Analysis - Entire process chain. • Adapt to functional change. • Multi skilled teams maximise flexibility. Improved Throughput with Skilled Self Optimising Teams

  33. Case Study: Governance on top Appraise Select Define Execute Operate Business Modeling Requirements Analysis & Design Implementation Test Deployment Config & Change Management Project Management Environment Agile Underneath

  34. The Death Of Technology Led Solutions • SOA and Enterprise strength agile - Business Orientated. • No longer technology orientated. • Heterogenous methods and systems enabling each other. • Incremental, Scaleable, Manageable. • Team Orientated. Links and resources: http://www.bjss.co.uk/fow

  35. Summary & Questions

  36. Summary • Derivatives increasingly important and profitable • Increasingly disparate • Business needs force flexibility • Balance between federal and centralized control • Requires common development methods • Needs strong accreditation throughout the organization • Part of your core competence • Not to be outsourced!

  37. Questions Paul Pickup Strategic IT Consultant Trading Technology www.tradingtechnology.com Andy Schneider BJSS www.bjss.co.uk

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