This week, we invited Miguel Daud, CEO at BAMMTECH to talk about the Brazil Trading Market.
Very specifically, we focused on three points: (1) How to make trading more efficient and at the same time fairer? (2) Discuss Brazil situation in that context. And lastly (3) How does BAMMTECH play in that arena.
Trading has primarily moved from the Exchanges’ Floors to the be performed in Data Centers. How is it better? How do consumers know they are not being cheated?
The new “stockbrokers” operating in the Data Centers are computers running trading algorithms. These algorithms are custom designed by each trading firm. Each brokerage house tries to outperform their competitors by maximizing the use of time – the tick-to-trade time is a lot smaller than it used to be.
Securities regulations, for example, those imposed by CAT in the US and MiFID II in Europe provide tools to promote fairness to consumers. They place the technical onus on traders to deploy solutions that enable:
- A better supervision of large and interconnected institutions.
- Increased market transparency.
How do you see this situation in Brazil?
The Exchange in Brazil needs to do more work when it comes to trading execution times. To date, the only firms concerned with timing were the ones involved in arbitrage – almost all of them, international brokerage firms.
An important step in the right direction is the recent B3 announcement for deploying the Unified Market Data Feed (UMDF) using Simple Binary Encoding (SBE). In a nutshell, text feed is slower to transmit across the wire and to decode from an application perspective than SBE. – Firms using Text Data Feed will be in serious disadvantage.
I should add however that, for the Brazilian Exchange System to remain competitive in a worldwide basis, it will need changes in speed, response time and traceability. To achieve the desired results there may even be changes in the currently adopted trade execution process.
In many exchanges outside Brazil, for example, executions are traced with timestamping of 100 microseconds with 1 microsecond granularity – Cost for non-compliance is in the millions of dollars.
Such needed infrastructural and regulation changes are essential as they impact:
- Brazilian Exchange’s ability to remain attractive on a worldwide context.
- High level local job creation: for example, many HFT programmers will be needed by local traders.
What are some of the ingredients for modern trading that BAMMTECH sells?
The FINTECH sector is one to which we have dedicated ourselves for a few years. It makes sense for a “boutique” distributor to focus and sell specialized solutions for an area (See: https://bammtech.com/en/it-services-by-industry/).
We sell products that allow the building of solutions to provide:
- Ability to execute fast:
Trading Bespoke Servers to implement trading algorithms.
Solutions for Reduced Switching Delays to reduce overall tick to trade time, receive market data and transmit orders.
- Ability to deploy customer specific solutions:
FPGA-based Networking Switches and SmartNICs with development tools and applications to allow for custom full trading stacks.
- Ability to Analyze Market Data:
Network Monitoring and Visualization
- Modern Traceability & Compliance
Resilient and Easy-to-Install Precision Timing Services including PTP