This morning, Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges, announced that it has integrated Swarm™, its patent-pending smart order routing system, which can be used stand-alone, or with the Modulus Exchange Solution for extended market making capabilities. This combination of innovation has been heralded as the most flexible liquidity solution in the digital exchange industry.
The revolutionary smart order routing system offers a complete aggregation and reconstruction of a global order book from multiple exchanges and liquidity providers. It also performs dynamic hedging of trades every fraction of a second, while offering plug-in capabilities for custom logic.
“Modulus does not mark up its liquidity solutions. We don’t engage in back-end deals or take kickbacks, either in the form of royalties or commissions, from providers. But, what’s truly revolutionary about this system is that it can be used as a stand-alone system for market making — or it can be used with our exchange solution to offer the most flexible market making system with minimal risk,” said Richard Gardner, CEO of Modulus. “That means that costs are lower and profit opportunities are higher whilst providing far more optimized architecture than anything else on the market, as it can leverage the full potential of the matching engine without any bottlenecks.”
The system is based on a swarm architecture, which runs multiple processes and bots in parallel. In essence, the Swarm™ smart order routing system aggregates a pool of liquidity from various exchanges and liquidity providers utilizing connectivity, such as web sockets, FIX 4.2, 4.4 and 5. The sources of liquidity are aggregated and reconstructed into a macro order-book and then streamed to the target exchange with programmable parameters.
“Like with all Modulus solutions, when liquidity is streamed into an exchange, nearly everything is customizable. From how the book is constructed and order sizes to the depth and width of spread, the solution is designed to fit the needs of the exchange operator. Custom strategies can even be developed when required, using a plugin to run scripts based on C++ or any other programming language,” explained Gardner. “Market makers can implement market making strategies on the source side to provide a more complex way of replicating order book price levels, TWAP , VWAP, and other such variables.”
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“It is important to note that this solution is best suited to latency exchange models with order books, working at a refresh rate speed of 100 milliseconds — which can be halved if the system is hosted on the same server as the matching engine. That’s why many use it in conjunction with the Modulus matching engine, but it is also offered as a standalone solution, as well,” noted Gardner.