Missed opportunity? Japan’s TSE should look to TOCOM to see the benefits FIX offers in improving efficiency and attracting liquidity
These issues, based on our experience, can be addressed in the following ways:
- Our system uses 100% pure Java 1.6 technology. Write-once/run-anywhere JVM technology provides true platform independence. For example, all common operating systems (Solaris/Unix/Linux/Windows), CPU’s (Intel/Sun/AMD) and addressing modes (32/64 bit) are supported with no changes to the product.
- Java is a mature server-side development platform, whose performance can approach - and in some cases - better a traditional C++ system. The run-time memory management and dynamic recompilation/optimization provided by modern JVM’s can yield high-performing systems with enhanced stability.
- To achieve low latencies, MetaBit’s FIX based exchange connectivity code optimization has targeted high cost operations (in terms of execution speed) such as transformation, data serialization, persistence and logging.
- To achieve a consistent performance, the spikes in latency must be reduced. Common sources of spikes are usually thread interaction and garbage collection. Our threading model ensures thread contention is kept to a minimum. Garbage collection is also dramatically reduced via optimization of memory allocations and use of techniques such as object pooling.
- Careful use of concurrent coding strategies allows the system to remain thread-safe whilst scaling from a few to 100 VS’s with almost no degradation in performance.
- Extensibility is achieved via use of a generic order object model for the core system. Pluggable adapters are provided for FIX (currently versions 4.0 to 4.4) and specific exchange connectivity for Japan’s exchanges.
Since 2008, low latency trading access, inclusive of proximity hosting, has become a focal point of Japan’s exchanges. The efforts to stimulate more offshore direct trading access to Japan’s markets has given the FIX Protocol a long deserved opportunity to prove its capacity to service the industry with a cost-efficient trading protocol, and low latency throughput which neatly dispels its reputation as being slow.
With the Tokyo Commodity Exchange now using FIX, the hope among the FIX community is that organizations such as the TSE will revisit their decision not to offer a high performance FIX gateway to their exchange systems. Our firm belief, supported by markets worldwide, is that that the FIX Protocol represents a sound value proposition for an exchange to attract increased liquidity.
Implementing FIX for the Tokyo Commodity Exchange Trading System
The Tokyo Commodity Exchange Inc, (TOCOM) was in, recent history, Japan’s first exchange to offer its broker members a FIX Gateway in addition to a native API for their new exchange system. TOCOM selected the world’s largest exchange system provider, NASDAQ OMX, to provide their exchange system. The decision was based on performance, scalability and stability combined with NTTData as TOCOM’s local integration and support partner.
In mid 2008, MetaBit was appointed by NASDAQ OMX as a partner in Japan to build the FIX gateway into the exchange system. The mandate was to build a FIX gateway, adding minimal additional latency, and to offer domestic and offshore members of TOCOM the opportunity to route their FIX order flow directly into the new NASDAQ OMX exchange system.
The key challenge was to build a FIX exchange gateway that would be competitive with the native API in terms of performance and low latency.
MetaBit has built a FIX gateway using the same technology framework as its current TSE, OSE and JASDAQ connectivity. At the core of the architecture is the Orc CameronFIX engine. The resulting TOCOM FIX gateway now offers consistent low-latency and high throughput performance.
TOCOM’s decision to champion FIX-based market access and to adopt an exchange platform from a non-Japanese vendor not only provides TOCOM’s members with a state-of-the-art execution venue but also places TOCOM in a leadership position among the Japanese exchanges.
On 7 May 2009, TOCOM’s new exchange system successfully went live and trading hours have already been extended to 11pm and will shift into a 24-hour trading service at a later stage.