In a high-frequency trading world where every microsecond counts, Intercontinental Exchange has struck a deal with the UK's National Physical Laboratory to ensure co-location customers at its data centre in Basildon get precise timing.
The rise of HFT has increased the need for synchronisation of trading systems and traceability to Coordinated Universal Time (UTC). With this in mind, from next January, MiFID II will require financial organisations to achieve up to 100 microsecond level traceability of trading events.
To help firms meet the rules, ICE is tapping NPLTime, which pipes precise time (accurate to one second every 158 million years) by fibre, direct from the NPL, which maintains the UK’s atomic clocks and is responsible for the dissemination of time across the UK.
The service provides a certified precise time signal by fibre, directly traceable to UTC and independent of GPS, which is susceptible to vulnerabilities. Users at ICE’s datacentre get the underpinning timing capability for traceable timestamping, latency monitoring and synchronisation, in compliance with MiFID II requirements.
The precision of the time service also aids forensics and audit, subsequently improving the functioning of financial markets and strengthening investor protection, says ICE.
TMX Atrium has already tapped into NPL, with UBS the first big bank to switch over to the new clock, viewing it as a route to compliance with the MiFID II RTS 25 timing traceability requirement.
Leon Lobo, strategic business development manager, NPL, says: "In today’s markets, timing is everything. High frequency trading represents around 30% of UK trades and 50% in the US - precise timing offers competitive advantage.
"Current systems rely on GPS which is vulnerable to jamming and other interferences and uses equipment that can be inaccurate. Timing issues have led to trading irregularities with the potential to disrupt markets."