Market Making

Market makers and other firms acting as dealers in financial instruments add stability to the market by simultaneously providing liquidity and assuming some risk. Though profit is made on the bid/offer spread, market volatility and automation have put increasing pressure on maximizing the value of each opportunity. As a result, the infrastructure to support market making is sophisticated and includes such components as:

• Feed handlers
• Financial Information Exchange (FIX) engines
• Price injectors
• Order Management Systems

Market making puts additional pressure on the messaging infrastructure not only because of the high level of communication among market making constituent components, but also because messages are frequently republished, resulting in a greater amount of information flowing than what originally came in. The co-dependencies among components cannot be dismissed either, leaving marking making infrastructure especially vulnerable to any issues in the messaging system. Any glitch and the firm is out-of-the-market for that day, jeopardizing any profit opportunities.

The Tervela Advantage

The Tervela Message Network™ based on the Tervela TMX Message Switch™ overcomes the challenges of market making by delivering a silicon-accelerated message transport platform that does not contain the inherent deficiencies of legacy software-based messaging systems and message-oriented middleware. For market making, the Tervela Message Network delivers critical messaging performance while ensuring operational continuity and risk mitigation. The many advantages of the Tervela Message Network include:

• Messaging Performance—The Tervela Message Network is able to provide higher performance messaging than peer-to-peer architectures while delivering scale beyond hub-and-spoke infrastructures. Hardware based message processing and forwarding ensure consistent high performance regardless of conditions.
• Low Latency—Hardware-based message forwarding ensures deterministic messaging performance—measured in microseconds—even during the most volatile market conditions. Equally important are the consistency and predictability of latency, along with the elimination of risk-generating outliers.
• High Availability—The Tervela Message Network ensures that components such as TMX switches failover swiftly and seamlessly, eliminating any single point of redundancy.
• Message Multihoming Service—Publishers and subscribers can access the Tervela Message Network over multiple physical interfaces, ensuring resiliency of topic flows.
• Constituent Decoupling—Unlike a tightly linked, risk-prone peer-to-peer messaging architecture, the Tervela Message Network decouples publishers from subscribers, freeing up their processing capabilities and eliminating any dissemination or consumption failures.

For more information, learn about the TMX or and how it can also support high-performance trading infrastructure, market data distribution and order routing applications.