The average investor probably doesn’t think too much about what happens when they execute a buy or sell call as long as it goes through with the desired result.
But financial services firms in Europe and the United States are subject to clock synchronization regulations under ESMA’s MiFID II and FINRA’s CAT standards, meaning all business clocks used to record the date and time of any reportable event must be synchronized within a specified timestamp granularity (depending on the type of trading).
Let’s look at MiFID II as an example. There’s three main requirements, outlined in RTS 25:
- A common reference time (UTC)
- UTC is maintained by the Bureau International des Poids et Mesures (BIPM) derived from comparing atomic clocks of over 70 recognized atomic clocks maintainers, including NPL (UK), NIST (U.S.)
- Time Source needs to be traceable to UTC: commonly used are GNSS (U.S. GPS, Russian GLONASS or European Galileo satellite system), NPL Time (fiber)
- Timestamp granularity & maximum divergence from UTC
|Type of Trading||Granularity||Max Divergence|
|HFT/Algorithmic||1 microsecond or better||100 microseconds|
|Other Electronic Trading||1 millisecond or better||1 millisecond|
|Manual||1 second or better||1 second|
- Traceability Reporting
- Document the system design, functioning and specifications.
- Produce reports on all ”business clocks” to demonstrate compliance of timestamp granularity and maximum divergence requirements.
See how Clockwork makes it easy to fulfill compliance requirements:
Clockwork uses an existing UTC reference clock to synchronize all other business clocks, whether on-prem or in the cloud, and logs everything for easy reporting. This gives organizations the flexibility to deploy in diverse environments with just a software installation. It leverages current on-prem hardware — for example, a GPS antenna synced to a PTP server to receive precise time from an atomic clock — and deploys cutting-edge software that syncs business clocks in the cloud or on-prem, co-located or multi-site.
Whether fully on-prem, fully in the cloud, or a hybrid of both, Clockwork scales with you as you shift further along your cloud journey and ensures you comply with time sync regulations. Contact us at email@example.com to learn more and schedule a demo.
Interested in solving challenging engineering problems and building the platform that powers the next generation time-sensitive application? Join our world-class engineering team.