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How to do financial trading IT right: Behind the scenes at Liquidnet

Matthew Heusser | July 3, 2013
With massive amounts of data, low latency, hundreds of connection points and no margin for error, financial trading is grown-up IT. Liquidnet does it in more than 40 markets with a staff of just 300. Here's how the company makes it work.

Liquidnet CIO: Taking 'Journey' to 'Shared Service Architecture'
At lunch on Friday, I get a bit of a surprise; CIO Neal Goldstein invites me for a chat. These things are hard to refuse. Besides, it means another trip past the frozen yogurt machine.

Neal Goldstein leads information technology at Liquidnet.

We discuss the company's business model: How Liquidnet enables institutional investors such as mutual funds, pension funds and companies to trade large blocks of shares. This is the conversation I expect, about the business side, but Goldstein takes a left turn, talking about how his technology group makes it possible for 700 of the world's largest asset managers to trade in 42 markets in real-time.

Like many large IT organizations, Liquidnet grew through immediate solutions. Each of these one-off solutions is individually efficient, but they also slow the entire system down, to the point that only a few years ago the company had 18 different protocols and communications platforms. After analyzing the impact of having 18 different ways to do things, the IT department began a "journey" toward a "shared services architecture." That's the architecture I've been learning about all week.

Goldstein describes the "why" of the architecture. Each market Liquidnet operates in has its own symbols, its own unique methods of market access and structures. By isolating that and creating a single reference architecture, the company can make entering new markets a standard process, not a system conversion. "We just entered Thailand," he says, "and before that, the Philippines."

Liquidnet has catered lunches every Friday. Today's theme: Barbecue.

For every trading company, Goldstein says, the biggest data problem "is capturing every movement of every stock. That creates terabytes and petabytes of data, which need to be scored and crunched for trading strategies."

A year ago, Liquidnet combined its ticker tape data repositories. Now, nearly all systems run off the same reference, which itself is scrubbed with different reference checks, Goldstein notes. One example: "Did we get the roughly 800 million distinct data elements ingested, scrubbed and processed a day?"

To master those message transports, Liquidnet brought "thought leaders in messaging" into a special interest group that, in a six-month span, determined what products it needed for the next six years. (The old messaging transport system lasted a decade.) "In a matter of a year or two, all of our core backend trading systems were converted," Neal says.

This method of identifying leaders, giving them resource, and working out a collaborative standard is something I hear several times from Goldstein. Some groups meet at lunch, others after work at "Beer Friday;" the company provides the drinks, especially if employees want to kick around ideas for improvement. He mentions the work of Thomas Vaniotis and Tom Puzak, managers who led a self-appointed initiative to visualize log data using ideas pioneered at Etsy.


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