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Devising a Smarter Approach to Client On-boarding and Certification

Newer tools that automate much of the on-boarding process can help companies get clients up and running much faster.

Introducing Internal Process Improvements
Adopting an automated approach to client on-boarding and certification has helped IEX to control staffing costs, improve efficiencies and get more done with fewer resources. "Under our current model, clients are able to directly interact with our trading system," said Zhao. "Then, we're immediately alerted if something is out of place. Not having to manually handle the entire process from beginning to end is proving to be a tremendous time-saver."

Lasalletech's Northey describes, "Typically, testing that happens in exchanges and ATS's follows a "develop now, test it at the end" approach. Firms dedicate a certain number of weeks to develop the interface, perhaps testing against an internally developed simulator. Then they attempt to certify against the trading venue. In a manual certification, every time you send in a test order and something doesn't work as expected, you have to hunt through a lengthy FIX log to figure out what went wrong. On the other hand, using automated certification gives you immediate feedback on errors without you needing to chase them down. The interface clearly identifies these errors and presents them to you in plain English with the associated FIX tags."

Enhancing Testing
Another drawback of relying on manual on-boarding and certification testing is that it inhibits firms from testing more complex scenarios. When testing manually, developers will typically evaluate very simple test cases since they have to setup everything by hand, which is incredibly time-consuming. But a more sophisticated platform can easily automate the entry of tens or even hundreds of data points for tests that are closer to real world scenarios. In fact, introducing FIX Conductor has helped IEX to enhance the sophistication of its testing. A process that is typically rudimentary (involving handwritten notes and emailed spreadsheets) has been transformed into a highly precise testing methodology.

Testing for edge cases, such as race conditions, against client systems has also become easier for IEX. Encountering race conditions was once an infrequent occurrence for exchanges, but as they place increasingly heavier loads on trading systems these issues are exhibiting themselves more often. Unfortunately, many firms' testing processes are not robust enough to properly detect these rare events. We saw evidence of this last year when one of Nasdaq's trading systems experienced a glitch caused by race conditions. The error caused mismatched Facebook share prices, which, in turn, delayed trading of the stock by half an hour.

Without an automated approach for identifying race conditions, IEX would need to quickly queue up orders manually. However, with FIX Conductor, the firm has been able to code the process and make it entirely repeatable. This approach saves time and minimizes the risk of potentially disastrous race conditions compromising the integrity of IEX's systems.

Assessing Client Feedback
IEX reports an overwhelmingly positive response from clients in regard to the FIX Conductor on-boarding and certification system. "There is a little bit of a learning curve for our clients in understanding how to interact with a new system. But the trade-off is an incredibly efficient on-boarding experience that gets them up and running on our systems faster. They value and appreciate that," said Zhao.

Visualizing the Way Forward
Utilizing automated client on-boarding and certification testing via Lasalletech's FIX Conductor is supporting IEX Trading in differentiating itself in a highly competitive marketplace. This technology is helping the startup exchange create a frictionless user experience that allows clients to connect to its trading systems faster. The on-boarding process that typically takes weeks or months has now been streamlined down to just a couple of hours.

In terms of future plans for the system, IEX is looking to enhance the quality of its testing practices even further. "Test building is an iterative process. As clients' needs develop, we must ensure that our tests remain relevant," explained Zhao. "This is an area where FIX Conductor has been useful. It allows us to design a new test scenario once, and then we're able to re-run that test repeatedly."

IEX anticipates that improved on-boarding efficiency combined with enhanced testing will be a solid foundation that will help it attract increasing business flow in the weeks and months to come.

About The Author:
Candyce Edelen is CEO of PropelGrowth, an agency helping financial technology companies develop and implement go-to-market strategies. Prior to PropelGrowth, she co-founded two financial technology companies including Selero, a company that provided order routing gateways, direct market access and FIX connectivity. She led teams in delivering FIX gateways to NASDAQ, Boston Stock Exchange and National Stock Exchange as well as dozens of other venues and brokerages. Edelen also was a conference committee co-chair for a recent FIX Trading Community regulatory briefing.
Candyce Edelen is CEO of PropelGrowth, an agency helping financial technology companies develop and implement go-to-market strategies. Prior to PropelGrowth, she co-founded two financial technology companies including Selero, a company that provided order routing gateways, ... View Full Bio

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IvySchmerken
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IvySchmerken,
User Rank: Author
1/7/2014 | 4:13:48 PM
re: Devising a Smarter Approach to Client On-boarding and Certification
Testing has been a topic that regulators are bringing up in light of the recent market glitches. If IEX can test out more complex scenarios such as "race conditions" at exchanges, then let's hope that more ATSs and exchanges adopt this method.
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