It goes without saying that it’s imperative for trading technologists to thoroughly test their systems before the put them in a production environment.
Clearly, building a market-beating trading platform requires a high level of uptime and a propensity for failure that’s as close to zero as possible. And for years technologists have used a range of tools to test the various components of their trading platforms, across all aspects of the order workflow. But many modern infrastructure testing tools are, in effect, point solutions that focus on a specific component of the overall picture. In today’s complex, competitive and highly regulated trading environment, this approach is no longer the most efficient way of managing your landscape.
The concept of the trading system as a single management layer is long past its sell-by date. There are multiple trading systems and testing solutions operating within the same environment, which creates a great deal of complexity. Firms need the ability to operate and control this highly disparate platform. They need the ability to manage and test on an enterprise scale, produce auditability and validation of test results, while at the same time embracing a wide set of testing tools and agents. But this is easier said than done.
Over time, trading operations have become complex networks of different applications using diverse technologies tied together into an overall trading infrastructure. Testing has evolved in much the same ad hoc way, and as a result firms often lack an over-arching ‘enterprise’ perspective or a coherent testing strategy, relying instead on a multitude of different testing agents, which in turn leads to issues of trading system reliability. This fragmented approach is not just inefficient, onerous and expensive, but could be detrimental – if not dangerous – in the new regulatory climate.
MiFID II requires all trading firms to certify that their algorithms have been tested to ensure that they do not create or contribute to disorderly trading conditions before being deployed in live markets. Errors can be costly, with the potential repercussions of a trading system failure reaching from serious reputational damage, to increased regulatory scrutiny, significant financial loss, personal repercussions for executives, and even systemic issues for the wider financial markets.
Clearly, a new methodology is needed – one that automates the testing process from end to end, eliminating the cumbersome process of managing multiple testing components across the environment. The operational benefits of such a solution are obvious. A standardized enterprise-wide approach to testing can improve the availability of reliable and consistent IT performance data, which can be used to help justify capital investments and other ongoing resource requests. It can increase the overall quality of trading operations, reduce costs, and head off potential new regulatory challenges up ahead.
VeriFIX is the only testing solution that takes an enterprise approach, validating the complete trading infrastructure. Developed to empower complex enterprise trading environments and deliver immediate benefits in the critical and complex areas of compliance and growth, continuous automation allows functionality to be deployed to production faster, with higher quality and at a lower total cost of ownership.
Download the white paper
Trading infrastructure testing: taking an enterprise approach.