Costa VictorosThe situation
A global ETF trading firm, headquartered in Europe, already quoted prices to institutional counterparties, and its pricing gave it a real edge. Most of that flow arrived through third-party routes, and the firm wanted to move to a direct model in which it acts as the venue. QTC worked in a joint engagement with a specialist capital-markets consultancy, acting as subject-matter expert for trading and D2C systems and infrastructure.
The challenge
Going direct moves duties that the venue or vendor used to carry onto the firm itself:
- Onboarding, testing and certifying every counterparty.
- Supporting counterparties and managing incidents that can reach all of them at once.
- Setting its own rules for last look, errors and disputes.
- Taking on credit, settlement, reporting and surveillance obligations.
What we found
Direct connectivity was a new operating model for the firm, so the supporting capabilities were still to be established: a structured onboarding process, counterparty ticketing and service levels, and per-counterparty controls on the direct gateway. Counterparty-specific behaviour was held in code, so each change needed a software release.
Our conclusion was that rebuilding the FIX engines would not address these points. The priority was the service and control layer around them.
What we delivered
- A target architecture with one connectivity layer for every channel, with counterparty differences held as configuration.
- Controls at the point of entry, including per-counterparty kill switches and throttles.
- A resilient gateway design, with failover tested before the first counterparty.
- A counterparty service-desk model covering structure, handoffs, escalation and KPIs.
- A phased route to launch, with each stage ending on an exit test.
Our view
Onboarding capability, rather than technology, would set the pace of growth. We recommended buying the commodity FIX engine and investing in the controls and service layer. Capacity was specified as a resilience floor, to be refined as real volume data becomes available.
Who this is for
Brokers, hedge funds and quant trading firms planning direct counterparty connectivity, or moving from venue and vendor distribution to bilateral flow, should expect the same questions. If you are weighing that move, we should talk.
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Client and counterparty details are withheld by agreement. Outcomes are described only where QTC can evidence them. Full case studies are available on request.