Financial trading




 

As a final example, we look at distributed systems support financial trading markets. The financial industry has long been at the cutting edge of distributed systems technology with its need, in particular, for real-time access to a wide range of information sources (for example, current share prices and trends, economic and political developments). The industry employs automated monitoring and trading applications (see below).
Note that the emphasis in such systems is on the communication and processing of items of interest, known as events in distributed systems, with the need also to deliver events reliably and in a timely manner to potentially very large numbers of clients who have a stated interest in such information items. Examples of such events include a drop in a share price, the release of the latest unemployment figures, and so on. This requires a very different style of underlying architecture from the styles mentioned above (for example client-server), and such systems typically employ what are known as distributed event-based systems. We present an illustration of a typical use of such systems below and return to this important topic in more depth in Chapter 6.
Figure 1.2 illustrates a typical financial trading system. This shows a series of event feeds coming into a given financial institution. Such event feeds share the following characteristics. Firstly, the sources are typically in a variety of formats, such as Reuters market data events and FIX events (events following the specific format of the Financial Information eXchange protocol), and indeed from different event
technologies, thus illustrating the problem of heterogeneity as encountered in most distributed systems (see also Section 1.5.1). The figure shows the use of adapters which translate heterogeneous formats into a common internal format. Secondly, the trading system must deal with a variety of event streams, all arriving at rapid rates, and often requiring real-time processing to detect patterns that indicate trading opportunities. This used to be a manual process but competitive pressures have led to increasing automation in terms of what is known as Complex Event Processing (CEP), which offers a way of composing event occurrences together into logical, temporal or spatial patterns.

Financial trading
 

This approach is primarily used to develop customized algorithmic trading strategies covering both buying and selling of stocks and shares, in particular looking for patterns that indicate a trading opportunity and then automatically responding by placing and managing orders. As an example, consider the following script:
WHEN
MSFT price moves outside 2% of MSFT Moving Average
FOLLOWED-BY (
MyBasket moves up by 0.5%
AND
HPQ’s price moves up by 5%
OR
MSFT’s price moves down by 2%
)
)
ALL WITHIN
any 2 minute time period
THEN
BUY MSFT
SELL HPQ

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This script is based on the functionality provided by Apama [www.progress.com], a commercial product in the financial world originally developed out of research carried out at the University of Cambridge. The script detects a complex temporal sequence based on the share prices of Microsoft, HP and a basket of other share prices, resulting in decisions to buy or sell particular shares.
This style of technology is increasingly being used in other areas of financial systems including the monitoring of trading activity to manage risk (in particular, tracking exposure), to ensure compliance with regulations and to monitor for patterns of 
activity that might indicate fraudulent transactions. In such systems, events are typically
intercepted and passed through what is equivalent to a compliance and risk firewall before being processed (see also the discussion of firewalls in Section)

 



Frequently Asked Questions

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Ans: The engineering of MMOGs represents a major challenge for distributed systems technologies, particularly because of the need for fast response times to preserve the user experience of the game. view more..
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Ans: The growth of the World Wide Web as a repository of information and knowledge; the development of web search engines such as Google and Yahoo to search this vast repository view more..
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Ans: The task of a web search engine is to index the entire contents of the World Wide Web, encompassing a wide range of information styles including web pages, multimedia sources and (scanned) books view more..
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Ans: a very different style of underlying architecture from the styles mentioned above (for example client-server), and such systems typically employ what is known as distributed event-based systems. view more..
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Ans: the emergence of ubiquitous computing coupled with the desire to support user mobility in distributed systems view more..
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Ans: The Internet is also a very large distributed system. It enables users, wherever they are, to make use of services such as the World Wide Web, email and file transfer. (Indeed, the Web is sometimes incorrectly equated with the Internet.) view more..
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Ans: Technological advances in device miniaturization and wireless networking have led increasingly to the integration of small and portable computing devices into distributed systems. view more..
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Ans: The crucial characteristic of continuous media types is that they include a temporal dimension, and indeed, the integrity of the media type is fundamentally dependent on preserving real-time relationships between elements of a media type. view more..
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Ans: hysical resources such as storage and processing can be made available to networked computers, removing the need to own such resources on their own. At one end of the spectrum, a user may opt for a remote storage facility for file storage requirements view more..
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Ans: In practice, patterns of resource sharing vary widely in their scope and in how closely users work together. At one extreme, a search engine on the Web provides a facility to users throughout the world, users who need never come into contact with one another directly. At the other extreme, in computer-supported cooperative working (CSCW), a group of users who cooperate directly share resources such as documents in a small, closed group. view more..
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Ans: Data types such as integers may be represented in different ways on different sorts of hardware – for example, there are two alternatives for the byte ordering of integers. These differences in representation must be dealt with if messages are to be exchanged between programs running on different hardware view more..
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Ans: the publication of interfaces is only the starting point for adding and extending services in a distributed system. The challenge to designers is to tackle the complexity of distributed systems consisting of many components engineered by different people. view more..
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Ans: a firewall can be used to form a barrier around an intranet, restricting the traffic that can enter and leave, this does not deal with ensuring the appropriate use of resources by users within an intranet, or with the appropriate use of resources in the Internet, that are not protected by firewalls. view more..
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Ans: ly and efficiently at many different scales, ranging from a small intranet to the Internet. A system is described as scalable if it will remain effective when there is a significant increase in the number of resources and the number of users. The number of computers and servers in the Internet has increased dramatically. view more..
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Ans: Failures in a distributed system are partial – that is, some components fail while others continue to function. Therefore the handling of failures is particularly difficult. The following techniques for dealing with failures are discussed throughout the book view more..
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Ans: he process that manages a shared resource could take one client request at a time. But that approach limits throughput. Therefore services and applications generally allow multiple client requests to be processed concurrently. view more..
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Ans: oncealment from the user and the application programmer of the separation of components in a distributed system, so that the system is perceived as a whole rather than as a collection of independent components view more..
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Ans: Reliability and security issues are critical in the design of most computer systems. The performance aspect of quality of service was originally defined in terms of responsiveness and computational throughput, but it has been redefined in terms of ability to meet timeliness guarantees, as discussed in the following paragraphs view more..



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