This week: Nasdaq/IDX, IMC/Cboe, S&P, and more

Nasdaq and IDX expand tech partnership

Nasdaq and the Indonesia Stock Exchange have expanded their technology partnership, which will see IDX upgrade its core trading platform to Nasdaq’s most advanced matching engine.

The multi-matching engine is a multi-asset, multi-currency, high-performance trading engine that helps exchanges deal with cash equity, fixed income, and derivatives on a single trading infrastructure.

Magnus Haglind, head of marketplace technology at Nasdaq, tells WatersTechnology that the project has started, both in terms of the planning around Nasdaq’s delivery and the activities that IDX needs to do on its side to ensure general market readiness.

“With every change or migration from legacy technology to new technology, it typically involves changes in APIs—the interfaces that firms use in order to connect to the market. And also in this case, IDX will be changing their APIs from legacy, proprietary APIs to industry standard APIs, both for market data and also for order entry,” he says.

IDX will transition from its legacy and proprietary APIs to the ITCH market data protocol and FIX for order entry.

Haglind says an important part of modernization is to align external-facing APIs with industry best practices, so the barriers for accessing the market are reduced.

He adds that Nasdaq’s body of work is typically a 12-month exercise working with clients. For IDX, it would need to prepare both its local and regional markets for the change, and according to Haglind, it typically takes 18 to 24 months for change across the system.

“Nasdaq is collaborating with IDX to provide early test environments to help clients [interact with the new APIs] and to help with documentation. Then, IDX will work with onboarding and market readiness [among market participants],” he says.

The platform will allow IDX to quadruple its transaction capacity while supporting a deterministic low-latency trading experience, which, Haglind says, would typically be between 20-30 microseconds depending on the access point.

The partnership also includes an extension of Nasdaq’s market surveillance partnership with IDX and an agreement to enhance IDX’s index business. As part of the upgrade, Nasdaq will provide IDX with an index calculation engine that will help the exchange calculate and publish indices using the new infrastructure.

The IDX partnership builds on Nasdaq’s other partnerships across the Indonesian financial system. Nasdaq provides market surveillance technology to OJK, Indonesia’s Financial Services Authority, the core technology platform that underpins KSEI, Indonesia’s central securities depository, and its Calypso treasury solution to Bank Indonesia, the country’s central bank.

“For the local community, [IDX’s upgrade to our most advanced matching engine] is a move to standardization and globalization, so market participants can then adopt industry best practice around how they interact with IDX. But that’s also good for regional players, who also provide access to Singapore, to Australia, and neighboring markets, because greater standardization around how the Indonesian market operates creates a more consistent fabric across the region,” Haglind says.

IDX’s decision to modernize its underlying architecture is in line with the strategic pillars set out by OJK to develop a robust, stable, and sustainable capital market that can support the ongoing development of the Indonesian economy.

Other exchanges in the region that use Nasdaq’s most advanced matching engine are the Australian Securities Exchange, Singapore Exchange, and the Stock Exchange of Thailand.

IMC joins Cboe Europe Derivatives as new trading participant

Market-making firm IMC has joined Cboe Europe Derivatives (CEDX), Cboe’s pan-European equity derivatives marketplace, as a direct trading participant. This will give IMC access to Cboe’s range of pan-European index derivatives and equity options.

CEDX launched in September 2021, initially offering trading in futures and options based on key Cboe Europe single country and pan-European indices, with clearing provided by Cboe Clear Europe N.V. The exchange expanded into equity options in November 2023, and now offers more than 300 options from 14 countries, including Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom. These products represent more than 90% of current average daily volume and open interest for the top 600 European equity options as of June 2024.

S&P Global enhances S&P Capital IQ Pro

S&P Global Market Intelligence has made updates to its S&P Capital IQ Pro platform with the addition of more than 19.4 million fixed-income securities with full reference data, pricing and analytics, as well as generative AI-powered earnings transcript summarization capabilities and enhanced private markets and segment data.

These enhancements follow previous updates to the platform with AI-enabled search, and the integration and delivery of IHS Markit content including loan pricing and analytics, Purchasing Managers’ Index indicators and country risk scores and economic data.

Last month, S&P Global completed its acquisition of Visible Alpha, making fundamental investment research capabilities as an add-on to S&P Capital IQ Pro.

Earlier this week, S&P Global also launched RiskGauge Desktop, a solution aimed at streamlining credit risk assessment workflows for corporations of all scopes and sizes. The scalable solutions combine its credit expertise, S&P Capital IQ’s data assets, analytics and an intuitive user workflow to provide credit professionals with a clear, tailored view of their credit risk exposures.

Some RiskGauge features include a proprietary scoring methodology combining market, financial and business risk inputs to offer a more accurate read on entity and portfolio risks, as well as at-a-glance view of critical entity and portfolio risk to enable quicker action through early warning signals.

RiskGauge reports for more than 50 million companies with historical performance and key developments.

Trading Technologies adds TCA and trade surveillance capabilities

Trading Technologies has introduced two new offerings, a transaction cost analysis (TCA) tool for futures trading, and a trade surveillance tool. These new offerings, TT Future TCA and TT Trade Surveillance, enhance its data and analytics, and compliance business lines.

TT Futures TCA uses the largest collection of anonymized, millisecond-level futures market and trade data with a vast array of metrics and measures. TT Trade Surveillance, which is powered by its proprietary Score machine-learning algorithm, combines new multi-asset coverage and new configurable models with the machine-learning models from TT Score, its first-generation trade surveillance platform.

TT plans to upgrade and shift all TT Score users to TT Trade Surveillance in the second half of this year.

TNS provides order routing and market data to Broadridge

Broadridge Financial Solutions has integrated its global futures and options (F&O) software-as-a-service platform with Transaction Network Services (TNS), an infrastructure provider for financial markets.

TNS will enhance the functionality of Broadridge’s F&O platform for the derivatives market by providing global exchange connectivity for order routing and market data access as the vendor of record. This will provide futures commission merchants and agency brokers with access to simplified market data.

TNS has access to over 130 exchanges across 25 countries with in-house expertise in each location.

NAB Ventures takes stake in Zodia Custody

NAB Ventures, the venture arm of National Australia Bank (NAB) has invested in digital asset custodian Zodia Custody. The investment builds on previous investments by Standard Chartered, Northern Trust and SBI Holdings.

Following the investment, Zodia Custody’s priorities include onboarding Australia’s ecosystem of homegrown digital asset exchanges. Zodia Custody established its Australian operations in late 2023, as part of its expansion plan in the Asia-Pacific region.

BlueFlame AI integrates with Encore Compliance

BlueFlame AI, the generative AI platform for alternative investment managers, has integrated with Encore Compliance, a compliance software solution provider. The integration incorporates Encore’s GenAI expert call surveillance technology into BlueFlame’s AI platform, allowing alternative investment managers to more efficiently handle deal management workflows and critical investment research compliance.

Mutual clients can review expert network calls with more speed, precision and control, and generate AI-driven insights and analysis for investment strategies. Encore’s technology creates an AI-generated summary of expert network calls, which is reviewed and made available along with the original call, to eliminate manual notetaking. Customers can design custom compliance checks and create compliance-reviewed transcripts that are fed into BlueFlame’s platform, which aggregates views across dozens of documents at a time and extracts key data points.

Encore’s foundation is built on more than 30,000 expert call transcripts and enriched with insights from compliance professionals and former regulators.

First Abu Dhabi Bank integrates Fenergo’s CLM solution

First Abu Dhabi Bank (FAB), the largest bank in the United Arab Emirates, has integrated Fenergo’s software-as-a-solution CLM solution to speed up client onboarding and enhance its anti-money laundering compliances processes.

Within six months of implementing Fenergo’s API and configuration-first solution, FAB can start onboarding new small to medium-sized business clients. Later on, it will roll out the platform to support corporate and institutional clients.

Fenergo’s solution enables FAB to deliver end-to-end digital client onboarding and risk assessment for sanctions, AML and know-your-customer obligations. This will allow FAB to straight-through process its low-risk customers. It will also give a view across the client’s lifecycle, from initial client onboarding, regulatory compliance, maintenance and off-boarding.

Marex to offer client clearing of interest rate swaps

Marex, a provider of liquidity, market access and infrastructure services in the energy, commodities and financial markets, will offer client clearing of interest rate swaps in July. Subject to final approval, on July 15, 2024, it will become a member of LCH’s SwapClear service.

It will be the first non-bank Futures Commission Merchant clearing member to offer client clearing of interest rate swaps through the LCH SwapClear service. This development expands Marex’s existing clearing memberships across energy, commodity and financial markets. Its non-bank clearing solutions is broker agnostic and can complement existing bank relationships.