Automated Quality Assurance Provides Five Opportunities For Execution Venues

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By Michel Balter, SVP Group Business Development, Itiviti
Execution Venues are mandated to ensure their technology is stable and performing as intended. However, often the need to launch new services to members or meet regulatory requirements, in a very short period of time, puts incredible pressure on assuring quality of the systems. Venues are forced to assume risks to meet time requirements. Adopting modern automated quality assurance practices and systems can create opportunities for a venue while removing risk.
Venues originated as opportunistic locations where people meet to trade, be it the Button Wood tree or the confluence of rivers, railroads, and the Great Lakes in Chicago. Now venues are locations where computers meet to trade. These computers talk over message based interfaces such as FIX. These message based interfaces provide an ideal entry point to drive automated end-to-end testing.
The optimal enterprise QA solution automates testing of execution venue trading systems using existing production data, taking into account changes in trading system environments over time.
This ideal QA solution can operate continuously in real time providing detailed analysis and reporting of test results. What opportunities are presented by this ideal solution for quality assurance?
Speeding time to market for improved competitiveness
In this fiercely competitive landscape, execution venues need to be highly responsive to evolving market and member demands. In large part, this means being able to deliver innovative offerings in a reasonable timeframe. But often the process of delivering new features, functionality or major upgrades is involved and lengthy, both with extensive development requirements and thorough QA.
Automation is a viable way for venues to improve time to market and keep system standards high by speeding up regression testing. Using automated testing, venues can deliver quickly while preventing major defects that could have a negative impact on Member relationships. BATS Global Markets, is one US execution venue using automated testing for this purpose. They utilise automated regression testing to not only speed up the overall process, but also add more sophisticated test cases. For them introducing greater QA has helped reduce the regression testing cycle from months down to just 33 hours. All-in-all delivering a process that is exponentially faster now, and far more thorough.
Improved efficiency is a prime area where automated testing shows its value. It’s not uncommon for venues to see a 40 percent reduction in time spent on the end-to-end testing process. This means they can perform platform migrations faster, giving Members an uninterrupted user experience.
Improved on-boarding certification for quality assurance
On-boarding solutions can offer the simplest and most powerful automated certification platform. With a web-based automated trading environment, execution venues can simultaneously certify multiple Members, 24 hours a day. Because no programming or manual interaction is required, in-house support resources are able to focus more on core responsibilities.
The ideal certification platform offers these features and functionality at the ready:

  • Flexible, optimised architecture for quick testing and program execution
  • Error reduction and improved time-to-trading with automated certification
  • Ability to integrate multiple destinations and events in the scenario testing environment
  • Simulated testing environments or plugs into the live member environment
  • Storage for historical data for compliance records
  • Manage the progress of on-boarding pipeline in a real time GUI allowing you to identify problems with member certification proactively instead of reactively.

Improving testing accuracy for better stability
Venues that use automated testing systems stand to dramatically enhance quality assurance. If they’re designed well, automated processes can be far more accurate, reliable and consistent than manual processes. Furthermore, sophisticated testing tools can introduce consistent, repeatable processes into a testing environment that can improve system’s stability. Using advanced automated testing such as model based testing and service virtualisation can greatly expand the quality of testing.
With automation, some venues have reported a 75% reduction in production defects when compared to manual methods. Minimising such defects can save venues a significant amount of money; both in terms of resources needed to fix errors and cost-efficiencies.
Tests are meaningless if the results cannot be accurately interpreted. Testing software helps interpret results by clearly presenting them, helping you trace errors across hubs and servers, and zeroing in on the likely culprits.
Achieving a more nimble response to regulatory pressures
Today’s regulatory landscape is in a state of flux, forcing venues to repeatedly modify their systems to meet evolving compliance requirements, often with short deadlines. Every change introduces new system integrity risks. In addition, regulators are putting added pressure to establish thorough testing practices and to ensure the operational integrity of trading systems, such as RegSCI.
Compliance is further complicated by the principles-based rather than prescriptive regulations. While regulating bodies do set forth some guidelines for compliance, they often have not supplied precise rules. This leaves room for interpretation on the part of venue that is striving to comply with the latest standards. To this end, a model execution venue is trying to create repeatable, sustainable, adaptable, demonstrable processes that help simplify the compliance burden.
Automated testing is an essential ingredient that can help venues stay on top of regulatory pressures. Automation can help tackle the compliance challenge in a few different ways. It fosters the creation of best practices in testing and auditable automation can make testing more comprehensive, while simultaneously making the process less manually intensive and time-consuming. Therefore, more testing gets done, and the tests are less prone to error.
Lowering total cost of ownership to free-up budget
Some venues are sceptical about implementing automated testing technology, considering the initial upfront investment involved. They think it’s more affordable to simply hire a team of testers to handle the job. The overhead involved in sustaining a manual approach over time is significantly higher when stacked up against automation, especially when overall test coverage and test quality are taken into consideration.
Likewise, building testing tools in-house can present considerable long-term expenses. Technical staff must devote significant time to not only building, but also keeping these systems up-to-date as regulations and other requirements change. That can become quite arduous. These bespoke testing systems become an entity in themselves distracting from the primary objective of testing the venue systems. Add to this, if building testing software is not an area of expertise, then the overall quality of testing will suffer.
The average venue will potentially see 150% return on investment (ROI) after the first year using the appropriate third party quality assurance tools, and a 320% ROI by the end of year three. The total cost of ownership (TCO) attached to automation is not only lower because it demands fewer staffing resources, but it also minimises the possibility of costly mistakes related to lack of domain knowledge or human error. Reduced TCO can also free-up budget, allowing venues to redirect money to other value-added areas of the business.
Venues will see improved productivity rates and efficiencies with testing. Prior to automation, all testing could only be completed during business hours, but post-automation it can be carried out 24 hours per day, 7 days per week. The net result is the delivery of new releases to members in weeks, not months.
Meeting today’s demands
In this unpredictable trading landscape characterised by constant change and unrelenting competition, execution venues need to find new ways of attracting and retaining members. One way of doing this is through introducing automation into the quality assurance process, which can help enhance performance and stability, while meeting the pressures for offering improved functionality and a reliable, faster service.
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