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Monday, February 1, 2016

UTP Vendor Alert #2016 - 1
SIP Launch of Enhanced INET Platform Scheduled for Q4 2016

Markets Impacted:

Products Impacted:

Contact Information:

What you need to know:

  • The Unlisted Trading Privileges (UTP) Operating Committee, comprised of all exchange participants and FINRA, has announced its approval of the migration plan for the Securities Information Processor (SIP) to Nasdaq’s INET technology for the UTP data services.
  • The migration is scheduled to be completed in the fourth quarter of 2016. The production-ready environment is scheduled to launch October 10, 2016.
  • Changes are being made at the direction and approval of the UTP Operating Committee. The participants of the Committee signed an agreement that retains Nasdaq as the SIP to manage all Nasdaq-listed stocks. Pending SEC approval, the SIP will be managed by a new Nasdaq subsidiary, the Consolidated Securities Source (CSS).
  • The agreement with Nasdaq includes a major upgrade of the SIP technology in order to dramatically reduce latency and improve performance of this key component of our U.S. market infrastructure.
  • The upgrade includes the following key components:
    • Improved Efficiency -Upon launch the SIP will have a latency level of 50 microseconds or lower, with a goal for further reduction to 25 microseconds within a year after launch. This will be accomplished through upgrades to software and hardware systems.
    • Increased Resiliency & Reliability - The SIP utilizes industry proven robust architecture offering active/active redundancy, dynamic failover, and active/active disaster recovery.
    • Increased Capacity – Upon launch, this distributed system will handle a minimum peak rate of two million messages per second, per data feed.
    • Improved Scalability - This highly scalable architecture is designed to quickly respond to capacity demands.
    • Binary Protocols – The binary protocols will provide message efficiencies to reduce latency and bandwidth.

Overview:

The UTP Operating Committee (UTPOC) has contracted with Nasdaq to serve as the SIP. Nasdaq will migrate the legacy SIP technology to INET technology for the UTP data services. Nasdaq plans to launch the new INET technology for the SIP in the fourth quarter of 2016. The production-ready environment is scheduled for October 10, 2016.

The SIP links the U.S. markets by processing and consolidating all protected bid/ask quotes and trades from every registered exchange trading venues and FINRA into a single, easily consumed data feed. The SIP disseminates and calculates critical regulatory information including the National Best Bid and Offer (NBBO), Limit Up Limit Down (LULD) price bands, short sale restrictions and regulatory halts.

Responding to industry requirements and the growing demands of the National Market System (NMS), Nasdaq will leverage its INET technology to provide the industry with an innovative, efficient and highly scalable technology solution. This low latency, extensible technology will provide the industry with the high availability and high performance that is currently available on Nasdaq’s core trading systems.

What will change from the current UTP services as part of this migration?

As part of the migration the following changes are being implemented:

  • Reduce latency below 50 microseconds
  • Increase throughput to 2 million messages per second per feed
  • Creation of new Data Feeds in Binary protocols using moldUDP64
  • Merge the OMDF Data Feed within the Quote service, as approved by UTPOC. This will harmonize UTP with how the CQS plan processes the FINRA ADF quote messages and will eliminate the need for a separate data feed and connection for this messaging
  • Replace the UQDF and UTDF Data Feeds with the new binary version of the vendor data feeds covering the Consolidation of Nasdaq Listed (Tape C) securities, the new data service will be referred to as "UTP Data Services (binary)”
  • Move the Mid Atlantic Data Center to Chicago and retire the legacy UTP SIP feeds from Mid Atlantic data center upon launch of new UTP Data Services (binary)
  • Introduce New IP Multicast Addresses for Primary and Back-up groups at both New York and Chicago data centers for publishing the UTP Data Services (binary)
  • Provide real-time (“hot”) dissemination from both the primary and secondary data centers
  • Introduce automatic Gap Fill capabilities eliminating the manual email requesting
  • Provide Market Center statistics within the trade messages (impact to market center high / low / last / volume), per the request of the UTPOC

What is the timeline for this platform enhancement?

The UTPOC and the SIP are working jointly to establish a release schedule that ensures a smooth platform transition. The production-ready environment is scheduled to launch Monday, October 10, 2016.

The following high-level schedule is provided:

Event Schedule Dates
Requirements analysis Completed - September 2015 - October 2015
Internal Binary design and preliminary build Underway – began November 2015 and is scheduled to complete June 2016
Internal SIP development testing Select weekends April 2016 – June 2015
Flat file and nightly test file availability May 2016 till production launch
Testing Facility (NTF) available for exchange participants and NTF connected clients Mid May 2016 – June 2016
User Acceptance Testing (UATs) Select weekends July 2016 – October 2016
Parallel Data Dissemination of existing services and New UTP Data Services (binary) (BETA versions) July 2016 – September 2016
Production Launch* October 10, 2016

* The UTPOC and the SIP will work closely with the industry to ensure readiness and participation in the testing and have designed flexibility within the migration plan to accommodate industry or regulatory requests for extension of BETA testing.

What are the direct Data Feed Recipients testing opportunities?

As part of the migration to the new UTP Data Services (binary), the following testing opportunities are scheduled to be available for direct Data Feed Recipients:

Type of Testing Scheduled Dates Description
New UTP Data Services (binary) Message Format Testing Beginning March 2016 through June 2016 A test file will be created and made available for direct Data Feed Recipients. This file is intended for format testing only and will not be representative of production data. The SIP will create a flat file in the new UTP Data Services (binary) formats and make this available via an FTP location for Data Feed Recipients to download and begin to test with the new formats.
Saturday User Acceptance Test (UAT) Saturday UATs:
  • July 9th and 23rd
  • August 6th and 20th
  • September 10th and 24th
  • October 8th (Confidence Test)
 UTP participants will be invited to enter data to test the new functionality. As it is generated, the UTP SIP will disseminate the new test data via the “UTP Data Services (binary)”. Advance registration is requested for the UATs.
BETA Parallel Testing July 2016 through September 2016 Direct Data Feed Recipients, which have configured and connected to the new IP Multicast Groups, will have the opportunity to receive BETA Versions of the new UTP Data Services (binary). Details on the three step BETA test process are shown below.
*Legacy SIP UTP Data Feeds remain the Production data services that data recipients must use for regulatory obligations.
Production Launch Production Ready Environment Scheduled for Monday, October 10, 2016 Production implementation of the new data services. This will be implemented as a “Hot Cut” release, vendors must be prepared to process the new binary data feeds or risk the loss of data.
*Upon launch of the new UTP Data Services (binary), Data Feed Recipients must use the binary feeds for regulatory obligations.

How will the BETA Parallel testing period work?

In order to provide the direct Data Feed Recipients ample testing opportunities, the UTPOC and the SIP will provide an extended BETA parallel period for the new UTP Data Services (binary), prior to launching into production. The migration to the new services will include a three step approach to parallel testing and implementation.

Step 1: Beginning in July and lasting one month

  • Parallel comparison test with production data
  • No Production Impact - No software or hardware changes to legacy SIP
  • SIP will manage a Transition Handler which forwards production exchange input transactions to INET SIP
  • Exchange inputs will be processed by the new platform in a BETA capacity
  • Results of this processing will be compared at the end of each day to the outputs from the legacy UTP SIP
  • Nightly replay of old & new formats available to Data Feed Recipients for testing and validating their systems

Step 2: Scheduled to begin in August and lasting two months

  • Active exchange participants will send quote and trade data to both Legacy and INET SIP systems
  • Legacy SIP remains the Production data services that Data Feed Recipients must use for regulatory obligations
  • New INET SIP will broadcast the new UTP Data Services (binary) formats as BETA version and will use new multicast groups
  • During the beta period the Participants availability will be available on a best efforts basis
  • Data recipients should use this two-month BETA opportunity to complete their testing and ensure their readiness for the hot cut change over scheduled in Step 3

Step 3: Scheduled for launch on October 10, 2016

  • The UTP Data Services (binary) will be deemed production ready. Data Feed Recipients must use the UTP Data Services (binary) for regulatory obligations
  • All UTP Data Services (binary) channels in production on new multicast groups
  • Legacy data feeds will still be disseminating for fallback purposes. Intend to operate in this configuration for two weeks before retiring the legacy services

What are the new IP Multicast Addresses for the UTP Data Services (binary)?

For a complete list of the existing and new IP addresses supporting the UTP data feeds and the new UTP Data Services (binary) please visit the UTP Plan website.

Which firm’s need to order the new UTP Data Services (binary)?

Only Direct Data Feed Recipients need to order the new UTP Data Services (binary). Indirect Data Feed Recipients should experience a seamless transition managed by their Data Feed Provider.

To order, Direct Data Feed Recipients must submit the appropriate documentation and receive prior approval from Nasdaq, as the Administrator:

  • Data Feed Application: Online or Hard Copy - Required for Direct Data Feed Recipients.
  • UTP Vendor Agreement - Required for all firms prior to initiation of the first UTP Data Service only.
  • System Application- Required for firms only if the data will be displayed or used in a System that is not yet approved.

Who should I contact for additional information?