Chapter 5 - Connectivity

Abstract

One of the architectural constructs important to create a straight through processing (STP) infrastructure is the structure that links systems externally and internally. Speed, reliability, and security in the trade lifecycle depend on enterprise connectivity. Industry standards are used to exchange trade-related information between systems. This chapter discusses the connectivity infrastructure that is crucial to implementing STP and reviews the business requirements from the perspectives of trade lifecycle and new trading models, such as algorithmic and electronic trading. The two most important features of computer networks include transport layer and message format. Message-oriented middleware (MOM) is recommended as the best transport layer for system-to-system communication within a firm. Direct connectivity, an extranet, or a third-party messaging infrastructure is used when connecting to systems outside the firm. There are several ways to send information from one system to another, including file transfer protocol (FTP), uploading to a server via HTTP, and middleware. Middleware technology is expensive and is usually purchased by larger banks, while smaller institutions rely on FTP and uploading Excel spreadsheets to websites for their connectivity needs. In an STP environment, linkages both within the firm and to various market participants outside the firm must be considered when designing a connectivity infrastructure.