Kx for Flow. Product Overview

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1 Product Overview

2 Kx for Flow Streaming analytics, deep liquidity and ultra low latency for regional banks and brokers offering institutional FX trading Kx for Flow is an ecosystem built on the latest technology and brought you to by one of the world s foremost providers of services and products to the capital markets. Built by a combination of experts in FX trading and data architects specializing in the design of high performance trading and market data systems, Kx for Flow has been engineered with the latest technology and deployed in the cloud following collaboration with some of the biggest players in the market. We hope to explain to you why this combination of the technology, the product and the pedigree of our company makes Kx your ideal technology partner in providing the best service to your clients and the greatest return to your shareholders. Kx provide an accompanying range of services and support for all its products. We provide a pool of talented and experienced developers with deep domain knowledge to assist clients in developing customised solutions that distinguish them in the market place. We provide services for defining, designing, testing and rolling out new functionality with supporting project management services to ensure control, quality and on-budget delivery. Kx also offers both public and private training services customised to client needs ranging from new system design and implementation guidelines to code optimization and architectural reviews. Kx has operational bases in Europe, North America, Asia and Australia to service its global client base both locally and on a near-shore basis. Deep Configurable Liquidity Pools Speedy Onboarding Process SAE16 Certified Hosting Environment Rich Business Intelligence Reporting 1

3 Kx for Flow Overview Built on the fastest streaming data analysis software on Wall Street, Kx for Flow s FX trading platform gives a clear view of the marketplace through its graphically rich real-time visualizations. Flow is a market-neutral trading platform with built-in connectivity to the full FX liquidity market. Clients can have total confidence and visibility when executing transactions because the user interface exceeds the industry standard, providing detailed insight for the lifecycle of each transaction across the system. Powerful FX trading platform delivers greater transparency Kx s leading database technology, widely used by global financial institutions for over two decades, is the engine behind Flow which enables it to capture more data faster than any other FX platform -- keeping it at the trader s fingertips for immediate use via streaming analytics. That information, coupled with total trading transparency, gives Flow users a competitive edge. KEY FEATURES Liquidity aggregation using dynamic filtering tools Credit management on NOP, DSL and margin basis Sales desk module with features including On Behalf Of (OBO) trading, on-thefly sales markup and manual intervention Real-time streaming analytics Connectivity to full FX marketplace Easy integration with third-party services provided by dedicated Kx on-boarding team Kx technology is unique in that it can query trillion row datasets in microseconds Pricing (ESP and RFS) and execution for Spot, Forward, NDF, Swap, CFD and Precious Metals Benefits clients by providing transparent pricing and best execution at low cost 2

4 Connectivity Exclusively a technology solution, Flow is market neutral, offering direct access to liquidity sources providing pricing and execution for FX and other assets. The philosophy behind Kx for Flow is predicated on providing all participants in the market with the tools to optimize their ability to service their customers. Our liquidity management solution has been developed in close consultation with the users of our ecosystem. Kx for Flow is built around liquidity pools; their creation, access, risk and credit controls around them. The schematic representation below shows how we create diverse streams and pools of liquidity to create a series of mini-ecns which can be configured dynamically. Kx for Flow is built around liquidity pools. The schematic representation below shows how we create diverse streams and pool of liquidity to create a series of mini-ecns which can be configured dynamically. A liquidity pool is a collection of Liquidity Providers/market makers (of your choice) mapped into a defined list of market takers (again your defined list of end clients). Kx for Flow provides a mechanism for creating multiple pools of liquidity targeted at specific audiences retail client base, corporate users, high frequency traders the choice is yours. Kx for Flow allows you as the owner of the platform to act as the glue between the parties, creating liquidity pools that you own, sourcing prices directly for Liquidity Providers with whom you have relationships (as opposed to anonymous ECN s), allowing your credit partners/prime Brokers direct access and offering your clients with the best prices in the market. Kx for Flow also offers extensive administration capabilities on the platform allowing each element of the process to be actively managed. Each pool is controlled and managed independently, allowing the owner to configure client-specific mark-ups. Kx for Flow liquidity management enables owners to configure liquidity pools based on client trading behavior. Liquidity pools targeting specific client requirements help ensure an optimal result. Separate pools also allow for greater management of the trading behavior and mapping to the correct market makers to the takers they want to service mapping HFT clients into market makers offering retail prices will only disaffect your Liquidity Providers, and raise your reject rates. Kx for Flow is designed with the knowledge that Liquidity Providers are critical to success. With targeted pricing and low rejection rates comes more business. Allowing your Liquidity Providers to directly target the client base they are after ensures they can offer you their best prices. 3

5 Liquidity Providers Liquidity is your business. Having the best Liquidity Providers on the street connected to Kx for Flow enables owners to offer their clients consistently tight spreads and a deep pool of liquidity. We have connections to a wide variety of Liquidity Providers ranging from the largest tier one banks through to bespoke providers, offering unique regional pricing. Kx has relationships with the majority of liquidity providers. We can facilitate introductions Critical to any business is ensuring that your partners feel they are part of the process and that they have control over their product. Kx for Flow provides a very flexible mechanism for Liquidity Providers to offer ESP and RFS pricing into Kx for Flow, offering multiple streams with different characteristics. This allows your Liquidity Providers to direct their streams to your target clients ensuring higher deal acknowledgements, whilst giving you complete control over the process. In FX Connections addition our unique Business Intelligence and data mining capability allows you to work closely with your Makers to allow them to be more competitive across markets and times. Liquidity Pool Management Kx for Flow contains a series of intuitive GUIs, configuration options and reports that enable Owners to manage and dynamically reconfigure liquidity pools. With the click of a button, any configuration changes (e.g. enable/disable a liquidity provider stream, amend a mark-up, etc.) take immediate effect. End Clients In addition to the Kx for Flow HTML5 Trading UI, end clients can access your liquidity pools via external systems. Connectivity is supported via the Kx for Flow FIX API, as well as adapters for third party systems such as MT4, various ECN and multi-bank platforms. Post Trade Bank Of America Barclays Baxter BNP Paribas Cantor CFH Markets CIBC Citi Commerzbank Credit Suisse Currenex (FXCM) Deutsche Bank GFT Goldman Sachs GSA Kx for Flow offers connectivity to Traiana (both Harmony and Netlink), MarkitSERV, and Elysium Technology Group for settlement and reconciliation purposes and a Drop Copy FIX API for connecting directly to back office systems. GTX/Gain HSBC JPMorgan Lucid Morgan Stanley Nomura Rosental Collins Group RBS SEB Société Générale SolidFX Standard Chartered Bank UBS Virtu Xenfin and many more 4

6 Risk Management Kx for Flow provides Smart Order Routing functionality that supports sweeping and dynamic price replacement. Kx for Flow also provides flexible configuration to either STP trades to the liquidity provider, or warehouse trades into their own B-Book, or to split a trade into a combination of these. The decision to STP or Warehouse is managed within the order routing configuration rules. Rules around whether to STP or Warehouse trades include Order size, Client and Time of execution. Internal limits can be configured by currency in order to allow an owner to limit their warehouse exposure. If an order should be warehoused but this would breach a currency limit, the option is available to either STP or reject the order. Additional internal matching functionality allows offsetting of matched client trades, enabling the bid/offer spread to be captured thus reducing the underlying trade risk and processing costs. Position Management The HTML5 Trading UI provides detailed position views, ensuring you are always in a position to monitor risk effectively. Positions are broken own by value date and also by maker and taker. Where client orders have been STP d, maker and taker positions will offset to zero. Where orders have been warehoused, a taker position will be created but no corresponding maker position. The net position therefore represents the internal position that must be managed. 5

7 Credit Management Kx for Flow provides Banks and Prime Brokers with the ability to define and monitor credit risk across counterparties from a single view. Kx for Flow enables changes to be applied in real-time thereby offering a swift response to changing market conditions or new client information. Credit lines can be extended or reduced to zero instantly suspending all further trading. With volatile markets and a wide assortment of bi-lateral relationships, credit management, risk and control it is critical to ensure credit lines are optimized. Kx for Flow Credit managers can view and control NOP and DSL exposure based on the following models: Liquidity provider: Limits (NOP and DSL) on the exposure to individual liquidity providers or across all liquidity providers. Client/Taker: Limits (NOP and DSL) on the exposures to clients/takers. Client/Taker sub-account: Limits (NOP and DSL) on the exposures of client s accounts. Limit checks are performed pre-trade, and also by marking exposures to market. To satisfy varying regulatory requirements it is possible to specify either Gross or Net exposures per client along with alerting and stop trading levels to further control the trading exposure. Alerts provide advance warning of adverse exposure levels while a breach of the stop trading limits ceases all further trading with that counterparty. Kx for Flow offers the ability to define limits on Clients and Liquidity Providers. An exposure blotter provides real time mark-to-mark exposure against clients. Breaches are notified by or popup and stored to logs for audit and compliance purposes. This information provides a valuable source for performing client credit analysis and credit utilization. Margin Client/Taker credit can alternatively be managed on a margin basis. Leverage can be set per currency pair for each client account. Open positions are marked to market for P&L calculations, with margin coverage tracked by the ratio between equity and margin used. Alert, call, and close levels can be defined for each account, with alerts in place for each. The system will ensure orders that would result in a call level breach are rejected. If a close level is defined, positions will be automatically closed on breach. The margin solution also includes support for end of day swap adjustments, commissions/fees, and reporting. Real-time account exposures are displayed on the UI. 6

8 Trading Kx for Flow offers trading capabilities over both API and a white label HTML5 Trading UI to cater for a variety of end client trading profiles. Kx for Flow supports FX Spot, Forwards, NDFs, and Swaps. Outside of FX, precious metals and CFDs are also supported. All common order types are supported, including market, limit, stop, If Done, and OCO. Post-trade allocations and netting options can be accommodated. HTML5 GUI The Kx for Flow Trading UI is implemented in HTML5, providing rich visualisations across multiple devices your desktop, tablet, or smartphone. The Kx for Flow trading UI has been designed with all users in mind, from end traders to internal prop desks and Sales traders who require the ability to trade on behalf of their accounts Key features provided include: Quote Board The quote board provides a real-time view of the best bid and offer prices for each currency pair. A pair can be added to the Trading panel from here. Trading Tabs Tabs can be added and named accordingly to allow the user to group pairs/instruments as desired. All layout changes are persisted automatically so that things appear as previously configured on subsequent logins. Executable Streaming Prices (ESP) Stream FX spot and standard tenor FX forward and NDFs, as well as precious metals and CFDs. Configure market depth views to suit your needs. Request for Stream (RFS) Submit RFS for FX spot, forward, NDF, and swaps. Broken dates and standard tenors are supported. 7

9 Blotters Monitor orders and positions via blotters featuring filter and export functionality. Orders can be cancelled or amended, positions can be filtered e.g. to view only the current day s positions or only the trader s own positions. Sales Desk Sales Trader users can manually intervene on RFS submitted by end clients. These users can also trade on behalf of end (OBO) clients and apply on-the-fly sales mark-up. OBO mode allows the Sales Trader to view things from the selected client s perspective, i.e. the client s pricing, order blotters, etc. Order Audit The Order Audit allows you to view the full audit trail of every order where the order was routed, the round trip time, fill prices, mark-ups, etc. Best Execution can be proven via the Landscape view. Devices Access the FX for Flow Trading UI via your desktop, tablet, or smartphone. White Label Kx for Flow can be the basis of your own branded trading platform. This allows you to offer the same superior real-time trading capabilities to your downstream clients to strengthen your relationships and extend your brand. Customise the UI look and feel to meet the desired appearance for you and your white label customers. Kx for Flow also supports design customization to allow for white label branding and personalization of the trading UI. Most clients will include their logo as a minimum. FIX Trading API For your internal trading systems, or clients that want to connect to you, we offer an industry standard FIX Trading API. Based on the FIX Protocol, it allows you or your clients to access the liquidity pools that you have defined for them. The FIX Trading API can be easily configured to get clients on-boarded quickly. Our dedicated on-boarding team take care of connectivity and conformance. Other Venues Adapters to ECNs, multi-bank platforms, and other venues are provided so that your end clients can receive pricing and execution seamlessly. 8

10 Analytics The Kx for Flow Analytics component harnesses the power of the fastest database technology on the market for streaming real-time data capture, offering unparalleled levels of performance and scalability. This data capture, combined with cutting edge HTML5 visualisations, allows you to gain a deeper understanding of the behaviour of your liquidity providers and end clients. Real-time streaming analytics ensure you can immediately understand how your business is performing and how it can be optimised, while historical analytics allow you to build a picture of behaviour over time. Historical analytics also allow you to provide full transparency to end clients and regulators. Out of the box analytics include: Pre-Trade Execution Post-Trade Live spreads Average spreads Spreads by time Spreads by quantity Top of book ranking Pricing time Series Price landscape Market impact LP hold times (last look) Fill/Reject rates Volume analysis and comparisons Volume distribution Profitability 9

11 Custom Views All analytics are customisable, allowing you to rearrange how you want to view and drill down on the data, e.g. view by provider, drill down to currency pair, order quantity etc. This flexibility is easily achieved with a few clicks on the HTML5 UI. Sample Analytics The Pricing dashboard provides a comprehensive view on the pricing coming into and out of the system. This allows you to comparing pricing across your providers and to drill down on this data for further insight e.g. look at specific currency pairs at specific times for selected providers. Date and time pickers allow you to look at historical pricing, while real-time streaming data is also provided. The Order Analysis dashboard allow you to look at fill/reject ratios by liquidity provider or by end client. These results can be ranked and pivoted to provide the insight you require. Volume statistics are also provided, allowing you to view how the executions on your system are being distributed. 10

12 Kx for Flow+ Kx for Flow+ is an accompanying solution to that enables users to capture data from multiple sources, develop their own propriety algorithms and analytics and execute them across multiple venues. It uses the combined functionality of Kx for Algo and Kx for Flow two leading trading applications from FD to enable clients to develop their own customized trading risk management requirements, quickly and cost effectively. The diagram below illustrates the approach. On the left is the standard Kx for Flow functionality that caters for full lifecycle processing and covers areas like A/B Book management, Credit Risk, Order routing etc. On the right is Kx for Flow+ which can take information from Kx for Flow (and multiple other sources) and provides a platform on which users can extend the existing functionality, or add new functionality, and pass orders, prices and other information back to Kx for Flow for standard processing. Users need no longer be restricted to packaged functionality only that can independently develop new functionality but simultaneously leverage the benefits of existing standard processing. Accelerating custom development using standardized processing Sample Use Cases: Route B-book trades to Kx for Flow+ for aggregation and customized pricing Automatically skew prices based on customized rules and parameters Perform What-if calculations to determine fill/reject decisions 11

13 Platform Kx for Flow is designed for scale and speed. It is powered by Kx Systems database technology which is used by the world's largest banks, hedge funds and exchanges. Kx for Flow is implemented by the FD professional services team to manage the trading, risk and regulatory challenges associated with the exponential increase in market data in recent years. In practical terms this speed and scalability delivers competitive advantages to brokers and their customers using the platform. These advantages include: More LPs providing dedicated streams means tighter pricing and greater depth Lower latency increases fill rates More timely calculations means better market and credit risk management Handling more data provides valuable Business Intelligence Why not build a solution? - We provide the hardware and storage. - We manage the data centre. - We develop and manage the connectivity to LPs. - We are co-located with LPs the world's top data centres in New York, Tokyo and Chicago. - We continually review and upgrade our technology stack so that we keep abreast and take advantage of innovations and new breakthroughs on the technology front. - Our software is designed for localization and has been implemented in Japanese and Arabic. - Our product can be white labeled to promote your brand or to allow you to launch multiple brands in different markets. - We have a number of ready built bridges such as MT4 plus drop copy services to Traiana, Elyssium, RTNS, ETG and MarkitServ. - Our solution meets the highest and most rigorous industry standards and is SSAE16 certified. - We provide full connectivity to systems such as MetaQuotes MetaTrader platform, C-Trader. Build v Buy Partnering on Kx for Flow allows brokers to focus on providing a premium service to clients while letting us take care of the technology aspect of your business requirements. Kx for Flow is a multi-tenanted hosted platform. The Total Cost of Ownership using this model is substantially lower than building, managing and upgrading your own technology solution. Our platform and our services team deliver substantial savings in otherwise prohibitive technology and personnel costs. Go Live Go Live - We provide a demo system to allow you to onboard API clients and to integrate your downstream systems in a controlled manner. - We bear much of the cost of regulation. We are SEF registered and our clients use our solution for regulatory reporting for regional bodies such as NFA, CFTC, FINMA, SFC and FSA. - Parameters such as markups and pool/stream setups can be dynamically reconfigured. - Configuration of parameters such as markups is straightforward and live trading can begin on Kx for Flow within hours of the decision to switch. Post Go Live Post Go Live - New product features, reports and enhancements are seamlessly added as part of a regular release cycle. - We work continuously with your API customers and technology partners to keep your applications up to date. - We have a world class monitoring and alerts system (Monitoring for Kx) in place to ensure the stability and efficiency of our system. We monitor and dynamically manage resources such as CPU, memory, storage, external connections and processes to ensure that even during times of excessive market volatility your operations continue to run smoothly. - Our Business Development team works with you as your business grows by liaising with partners and LPs in centers such as New York, London and Tokyo 12

14 Additional Platform Benefits: Hosting Environment Best of Breed approach in selection of IT solution HW & Providers including Data Centre hosting partners. Equinix NY4 (Tier 4 provider) currently the default global Data Centre hosting partner for FD production with provision of 24*7 onsite smart hands resources to support ongoing maintenance & upgrades. Configuration includes Disaster Recovery/Business Continuity Planning site. Data Centre delivers 5*9s SLA in power, AC, network & hosting pace. High availability clustered/redundant solutions with resilient fail over implemented at the core network, internet & firewalls layers. High availability clustered/redundant solutions with resilient fail over implemented at the server /system layer across LP, Application, DB, FIX and Web tiers. Monitoring for Kx - monitoring application across server resources and internal DF processes. Kx for Flow Alert messaging system and alert generation. Enterprise-wide IT infra monitoring platform. Ultra low latent market data and order execution speed Kx for Flow provides key attributes that provide an ultra low latent environment: Ultra low latency connections - Liquidity Providers and clients are linked via fibre/copper cross connections and collocation in data centres. Streamlined application structure Kx for Flow is coded with delivery and speed as critical requirements. The application has been built to parallel process all rate checks, mark-ups and risk management features to avoid any unnecessary processing which could delay rate or deal transmission. High speed architecture Kx for Flow is written in Kx native q language and run in-memory to allow for extremely fast and efficient processing of very large amounts of data. Very high LP & network carrier density provides increased flexibility & superior lead-time in connection of collocated d & non-collocated Makers/Takers. All of these attributes enable rates to be delivered and deal flow returned with the lowest possible latency. This helps to reduce levels of trade rejections caused by Liquidity Provider rates updating during the time it takes from deals to flow from the provider through to Kx for Flow, reach the client and then to be returned to the provider. If the round trip time for rates and deal flow is greater than the frequency between updates then chances of trade rejections are increased. IT Security & Compliance Defence in Depth philosophy & approach to IT Security. Enforcing Governance & Compliance with respect to maintaining Data Centre SSAE16 accreditation, physical & logical controls including: monitored secure access, change & patch mgmt., data backup & archive, sandboxing, physical & logical segregation etc. Maintain alignment with Industry standards ISO Security Incident Management protocol. Deploy, support & monitor SIEM (Security Info & Event Mgmt system which includes: real-time HIDS & NIDS monitoring & logging, clustered redundant firewalls & DDoS protection. Regular UAM audits, vulnerability & penetration scans. 13

15 Our Team We have assembled a large team of battle-hardened professionals with deep technical and domain knowledge who have worked with the world s leading banks, brokers and exchanges. The team has been organized into specialist units dedicated to driving our product roadmap and to provide a premium support service to our clients. Business Development Our team will work with Kx for Flow partners such as our LPs, Prime Brokers and back office providers to help you grow your business. Based in major financial centres this team has an invaluable network of contacts. Trade Analysis Users of Kx for Flow receive access to a team of expert FX analysts who can help them gain a greater understanding of the behaviour of their connected LPs and end clients. This ensures the highest level of profitability and client retention for Flow users. On-boarding Our dedicated API on-boarding team will help you in building and testing APIs in various trading systems. This team also adds new liquidity sources to Kx for Flow. Support Our business support Unit team is on call 24 hours a day around the globe to assist with queries, training, giving advice on configuring settings and providing ad-hoc analysis Infrastructure We have a team of experts dedicated to important areas such as data centre management, network optimisation, security, failover, disaster recovery, certification and API throttling and conflation Business Analysis Our Bas work with you to ensure that the evolving requirements of your business are incorporated into our product roadmap. 14

16 EMEA Head Office 3 Canal Quay, Newry, BT35 6BP N. Ireland Tel: +44 (0) Belfast Gloucester Street, BT1 4LS N. Ireland Tel:+44 (0) Dublin Fleming Court, D04 N4X9 Rep. of Ireland Tel: +353 (0) London Cannon Green Building, 1 Suffolk Lane, EC4R 0AY United Kingdom Tel:+44 (0) Americas New York 45 Broadway, New York, NY USA Tel:+1 (212) Toronto 31 Lake Shore Road East, Mississauga, On, L5G 4V5 Canada Tel: +1 (905) Ottawa 300 Terry Fox Drive, Kanata, On, K2K 0E3 Canada Tel: + 1 (613) Palo Alto # Bryant Street, CA USA Tel: +1 (650) APAC Sydney 22 Pitt Street, Sydney, NSW 2000 Australia Tel: +61 (0) Singapore One Raffles Quay, North Tower, #30-03, , Singapore Tel: Hong Kong Two Exchange Square, 8 Connaught Place, Central Tel: Tokyo Sanno Park Tower, Nagata-cho, Chiyoda-ku, Japan Tel:+81 (0) Kx and kdb+ are registered trademarks of Kx Systems, Inc., a subsidiary of First Derivatives plc.