Markets Media recently caught up with Jim Nevotti, President of Sterling Trading Tech, to discuss the market’s extreme recent volatility and the logistical challenges presented by the Covid-19 virus.

How are market volatility and activity impacting trading platforms?

We are in a period of unprecedented market volatility, so technology firms are effectively being stress tested daily. This extended period of volatility will show which firms have made the significant investments in their infrastructure required to provide the fast and stable technology that is essential to clients during periods of peak volatility. End users depend on the stability of their trading systems to both manage the increased market risk and to take advantage of market opportunities.

Have there been any fault lines in market structure identified?

We have not seen any fault lines appear in the underlying market structure however, at the end of 2019 there was a big push by zero-commission brokers to provide “free” trading. Some high-profile firms in this space have had significant outages, exposing fault lines such as impacts caused by an increased number of users using their systems all at once and high rates of market data maxing out the bandwidth in their underlying infrastructure.

What are the technological implications possible large-scale working from home (due to Covid-19) in the near future? 

Industry-wide everyone will be relying on technology in the coming weeks as businesses across America begin to enact their BCP’s (business continuity plans), with many mandating that employees work from home to maintain social distancing. As a financial technology provider, we’ve already anticipated different stresses on our systems from extreme market volatility to increased web and mobile user activity. On the back-end, trading platform providers will rely on video conferencing and remote working services like Jira and Zoom to provide client services and facilitate effective communication among employees and clients alike.

What technological lesson(s) can be learned from the current market situation, for future reference?

The biggest lesson to be learned is that there is simply no substitute for investing in infrastructure and BCP (business continuity planning).  It is imperative to use best in class technology and have the right team running your operations. While it’s impossible to anticipate and prepare for market changing events like COVID-19, platform providers can be prepared for market volatility by enhancing the speed and stability of their infrastructure.