Service Navigation

This week’s topic: T7 – a true success story

Release date: 03 Dec 2018 | Eurex Exchange, Eurex Clearing

This week’s topic: T7 – a true success story

Our trading architecture T7 really is an ongoing success story. Now, with Release 7.0 ready to go live on 3 December 2018, the time is just right to look back on the beginnings and to attempt an outlook on the years to come. How did it all start, what are the reasons for its success, and are there new advancements and enhancements coming with Release 7.0.? Jonas Ullmann, Head of Market Functionality, has all the answers.

Jonas Ullmann, Head of Market FunctionalityZoom

Jonas Ullmann, Head of Market Functionality

T7 has been around for quite a while now. When and how did it all start?

T7 was introduced at the end of 2012 for the first Eurex products. Its predecessor OptimISE has been used at the International Securities Exchange (ISE) and was the basis for the development of the T7 system. Migrating trading from the old Eurex Classic Trading system to Eurex T7 was a major step in improving latency, throughput and functionality for Eurex. The introduction of state-of-the-art order-by-order market data (EOBI market data) and the migration of our off-book services to T7 were further milestones in the last five years.

How many exchanges have adopted T7 so far, and what are the reasons for its success?

T7 is the state-of-the-art trading system used by several exchanges. Especially within Deutsche Börse Group, it is used for our derivatives markets (Eurex, EEX and Nodal), our cash market (Xetra), other partner exchanges (e.g. Vienna) and for our FX spot and derivatives markets (360T). With our technology and infrastructure, we offer the market a stable, predictable and low-latency platform to trade. Furthermore, the T7 system is also the basis for the trading system’s operated by the Bombay Stock Exchange.

What is new with Release 7.0?

First, there are enhanced and new risk functionalities and protection introduced to further support risk management. Driven by their internal and by regulatory requirements this is becoming more and more important for our participants. Enhancements of Quote Mass Cancellation and Market Maker Protection to Business Unit level allow for cost savings and risk reduction for liquidity providers who actively provide liquidity via multiple sessions. A new Pre-Trade Risk Limits functionality will continuously check whether traded quantities in combination with the incoming order activity would breach the pre-defined risk limits. As it is available for on-book and off-book trading activity both for Non-Clearing and Clearing members, any participant can use it, especially where limiting of exposure matters.

This new risk functionality will be available with release T7 7.0. The maintenance of risk user groups (the scope for limits defined by Non-Clearing members) will be possible starting on 3 December 2018 and risk limit maintenance will be possible on 4 December 2018.

But there is more to come with Release 7.0?

Yes! There is, for example, Eurex Improve. It will extend our matching functionality to allow for price improvement requests of individual client orders by interaction with the order book. The innovative feature of this solution will be the full integration into the order book matching and provide benefits for end customers in terms of price improvements and likewise a fair volume distribution among liquidity providers and brokers. The launch date of the functionality is planned for Q2 2019, product scope and parameters are currently discussed with market participants.

Eurex EnLight, which was introduced in 2018 and launched for fixed income options and the Swiss equity and index options, will be extended in T7 7.0. Together with our participants, we have continuously introduced new features and workflows. The most recent enhancement is the working delta workflow that replicates the typical working delta negotiation. This new functionality will be available in March 2019 with several other enhancements and the extension of EnLight into more Equity and Equity Index segments is planned for Q2 2019.

Then there is the Passive Liquidity Protection. Can you tell us a bit about this new functionality?

We want to give all market participants an incentive to place improved passive orders or quotes with tighter spreads and larger size in the options order book. Unlike active orders, passive orders do not intend to react on existing orders in the order book. Thus, passive orders are exposed to price changes – in contrast to market participants who merely execute orders actively. The new model will allow Eurex to protect liquidity providers against adverse selection when updating order book positions in case of underlying movements. This is especially important in the more complex options markets where price formation is closely linked to the underlying. Passive Liquidity Protection will therefore be only introduced for options.

The launch date of the functionality is planned for Q2 2019, product scope and parameters are currently discussed with market participants.

And, finally, you will introduce extended trading hours into the Asian time zones.

Yes, this extension will allow market participants to implement more precise hedging techniques, run relative value/cross-market strategies and act on market news or major events outside the European core trading hours. The product scope includes EURO STOXX 50®, DAX® and Mini-DAX® Futures, all German fixed income futures and all MSCI Futures.

All Trading Participants and Clearing Members can participate during the extended service hours via existing memberships and infrastructure.

Who is the team behind T7?

The team behind the development of the trading system is very diverse. It obviously starts with the functional architects, the software developers, the testers, business analysts and architects of all the different components and areas. That is not all; we work very closely together with our Product and Market Design and our Business Development teams to introduce new functionality, features and products to make T7 as attractive as possible to trade. On top, the Sales and Key account managers often bring feedback from our customers how we can further enhance our services we offer and these are then included in our development and made sure we fulfil the expectations of our customers. This continuous dialogue to include customers’ demands and needs is something very important to us and therefore I see everyone working at Eurex as part of the T7 team contributing with their value and experience to a continuously growing and developing trading system. Everyone is motivated and passionate to bring forward our system and make it a success. The work and cooperation the team is putting into this is exceptional!