Nice Systems, a provider of trading compliance software, has acquired Redkite Financial Markets, a real-time institutional surveillance technology provider, in large part to boost its cloud presence and cost effective integration technology to enable intraday surveillance.

Vendors are tailoring there offerings to be cloud-compatible. The use of cloud technology not only enables firms to get out from under the expenses of maintaining costly infrastructure in-house, but also facilitates compliance with rapidly changing regulations.

“The Redkite technology enhances our ability to analyze intraday trading activity in real time, a requirement that has been increasingly on the agenda of regulators and customers,” said Amir Orad, president and chief executive of Nice Actimize.

The acquisition will advance Nice Actimize’s cloud-based trading compliance offerings, enabling clients to be highly responsive to regulatory challenge and timelines.

Redkite, with origins in investment banking, has a customer base comprised of global investment banks, broker-dealers and futures clearing merchants in a range of market segments.

“Redkite was founded by ex-traders, who were building algorithmic trading systems long before they became a household word,” said Orad. “In addition to leveraging the cloud, they’ve figured out how to address the number one challenge in compliance, which is access to data.”

Redkite’s coverage library of real-time surveillance analytics include various models including the demands of the European Securities and Markets Authority (Esma), and supports different asset classes such as equities, fixed income and futures.

Esma, the pan-European regulator, has published guidelines on automated trading, and other regulators plan to follow suit.

Esma has issued guidelines for investment firms that operate algos to “develop testing methodologies for new algorithms that might include performance simulations/back testing or offline testing within a trading platform testing environment”.

“High-frequency trading firms, algo providers and DMA [direct market access] providers are quite obviously the target for these guidelines,” Matthew Coupe, sales director at Redkite Financial Markets, told Markets Media in September.

The Esma guidelines recommend real-time surveillance. “It’s the first time that regulators have mentioned monitoring transactions in real time,” said Frederic Boulier, director of anti-money laundering and compliance, EMEA at Nice Actimize. “There are various risk categories addressed via real-time controls, such as controls to block unauthorized transactions or transactions which could be disruptive to the market, as well as controls to prevent fat-finger errors.”

For Nice Actimize, the cloud delivery model employed by Redkite will be extended to all its products and services.
“Financial institutions will be able to use our solutions whether installed on-premise of delivered in the clouds,” said Orad at Nice Actimize. “These capabilities are important during this period of heightened regulatory reforms, when firms require the agility to choose between on-premise implementation, cloud or a hybrid approach.”