Cloud Strategy Enables Seamless Processing and Robust Market Surveillance
WASHINGTON — FINRA processed an unprecedented amount of market activity through the first six months of 2018, averaging a record 57.9 billion electronic records per day during the period — a 62-percent increase over the average daily volume in 2017. FINRA’s pioneering cloud strategy has allowed it to handle the record-setting volume smoothly while performing vigorous regulatory oversight of securities trading.
This year has witnessed some of the most volatile markets in years, with as many as 101 billion electronic messages coursing through FINRA’s regulatory platform in a single day – nearly triple the average daily volume experienced in 2017. All of the 10 highest-volume days on record have occurred in 2018, with four of them in a single week: the exceptionally volatile week of Feb. 5.
“Processing and analyzing this record activity efficiently and effectively is essential for FINRA to do our job of protecting investors and ensuring market integrity,” said President and CEO Robert W. Cook. “Cloud storage and processing have made it possible for FINRA to not only stay ahead of growing volume but also perform increasingly sophisticated surveillance across U.S. securities markets.”
Trading activity in the stock, options and fixed-income markets creates a variety of electronic records that FINRA monitors for regulatory purposes. Every day, FINRA receives order and trade data regarding 41,000 investment products from 17 securities exchanges, more than 60 alternative trading systems and almost 1,400 broker-dealer firms. Because these data come in different formats, staff “normalizes” them to create a single, virtual view of the market for any given security. Analysts run almost 200 algorithmic “patterns” to look for more than 300 potential threat scenarios including market manipulation, customer protection, market conduct, trade reporting or other violations and to surveil for insider trading.
“With a traditional data-center approach, capacity is limited to that of the servers in a data center. Had we stayed with that approach, the volume from any one of these exceptional days could have taken us days to finish processing,” said CIO and Executive Vice President Steve Randich. “With cloud storage and processing, our staff has access to petabytes of data in seconds or minutes, even during consecutive days of record-breaking activity.”
Dynamic scalability was one of the key factors FINRA considered when it made the decision in 2014 to move 90 percent of its processing and storage work to the cloud by the end of 2016. Randich noted the other benefits in a FINRA blog post in March.
“As a self-regulatory organization we can – and as illustrated in this case, we did – make multi-year investments that support an innovative regulatory approach,” Randich wrote in that blog post. “We are committed to continue looking past the next corner to be ready for the road ahead.”
Rising Tide of Market Activity
|Year||Average Daily Records Processed (Billions)|
|2018 (through June 29)||57.9|
Most-Active Dates on Record
|Date||Records Processed (Billions)|
FINRA – the Financial Industry Regulatory Authority – is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry – brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.