CFD Market Data … Boring but essential!
A key and often overlooked issue that we have been seeing time and time again, with LPs and brokers alike, is that of inaccurate market data. In times of extreme market volatility and high volumes, such as we have experienced recently over the US election results and the announcements in the press regarding a Covid-19 vaccine, these issues have become particularly apparent.
During such volatile markets there can be a huge increase in the weight of data that is being sent by providers across the most widely traded CFDs, including indices and oil. Without the right systems and connectivity in place, the accuracy of an LP’s price can be severely impacted due to their inability to process the sheer volume of quotes that they are receiving.
The knock-on effect of this, as we saw from a number of providers, is that their pricing slows down over these periods and very quickly becomes ‘off market’, and in the case of at least one that we are aware of, their systems can also crash.
In either case there can be a huge impact on a Broker’s both A and B-book profitability if they are receiving (and redistributing to their clients) slow and/or inaccurate pricing, or indeed no pricing at all. There are also, of course, other problems that can arise, including massive surges in customer complaints on execution, and associated reputational damage.
The markets themselves are becoming significantly faster (and arguably more efficient) and it is becoming apparent that the incumbent market data providers are, in many cases, not up to scratch.
To combat this, IS Prime and the ISAM Capital Market groups’ in-house quant team has invested significant time and resources in developing its systems and processes to protect the integrity of data, and we work closely with specialist market data providers to safeguard the accuracy of our proprietary ‘Index swap’ products across indices and oil.
The group’s customers can rest assured that the stability and reliability of our technology allows us to continue to price accurately, irrespective of the underlying market conditions.
IS Prime is part of the ISAM Capital Markets group which includes IS Prime Limited, IS Prime Hong Kong and IS Risk Analytics. The Group offers full service multi-asset brokerage and execution via it’s cutting edge proprietary technology.