Fintech has emerged as one of the hottest tech industry in the recent decade. It is a portmanteau of financial services with modern technology. Indubitably, it has disrupted the traditional financial services to their core. Such is the impact of fintech sector that small startups tend to give a cut-throat competition to established banks and financial institutes.
Unarguably, Fintech industry brings along thrilling opportunities and innovations, the security of user data and thus, legal compliance is of utmost important at the same time.
If you are planning to ride the wave of this Fintech era with your disruptive app idea, we strongly recommend you to go through the following 9 transaction and security protocols to build a regulator ready fintech application.
1. National Automated Clearing House Association (NACHA) – NACHA is a not-for-profit trade association that manages the development, administration, and governance of the ACH Network, the backbone for the electronic movement of money and data in the United States. If your fintech application has a payment processing feature, it should comply with rules & business practices of NACHA.
2. OUCH- Developed in 1997, OUCH provides customers with a fast and highly efficient way to connect to Nasdaq, BX and PSX. This protocol allows subscribers to quickly enter orders into and receive executions. OUCH was developed with simplicity in mind — subscribers and their software developers can integrate Nasdaq into their proprietary trading systems or build custom front-ends to Nasdaq systems. OUCH accepts limit orders from system subscribers, and if there is a matching order, they will execute. Non-matching orders are added to the Limit Order Book, a database of available limit orders, where they are matched in price-time priority.
3. QIX (NASDAQ Information Exchange) protocol is specifically designed for NASDAQ transactions. QIX improves business flow by minimizing the number of redundant and unnecessary messages, reducing time spent in voice-based telephone conversation and eliminating paper clutter. QIX is an efficient protocol that allows automated, real-time trading. QIX offers reliability in placing orders and quotes in the Nasdaq system, while providing improved throughput and reduced latency.
4. RASHport –An equity protocol that allows subscribers to enter orders, cancel existing orders and receive executions while providing smart order routing and special handling features. RASHport also provides advanced functionality and the ability to process sophisticated order types including discretion, random reserve, pegging and routing. Similar in design to OUCH, RASHport also allows subscribers and their software developers to integrate Nasdaq into their proprietary trading systems or build custom front-ends
5. Fix protocol – The Financial Information Exchange (FIX) protocol is intended to streamline electronic communication in securities industry. FIX is session based and is mainly used for B2B transactions. Financial Information eXchange (FIX) is a vendor-neutral standard message protocol that defines an electronic message exchange for communicating securities transactions between two parties. FIX is a standard format used today by a majority of U.S. firms in the options securities business.
6. DROP allows a subscriber to view vital information about trades including date and time, participant, order identification and exchange prices etc. It is a feature of ITCH, OTTO, RASHport and OUCH protocols. DROP facilitates the ease and effectiveness with which NASDAQ customers conduct business in the options market. Protocols that incorporate DROP help subscribers to monitor, place, execute or cancel orders.
7. CTCI (Computer to computer Interface) is a digital communication protocol that allows NASDAQ customers to do business in open market. Computer-to-computer interface (CTCI) is a method by which Nasdaq subscribers can enter transactions, such as Nasdaq Market Center orders and trade reports, from their computer systems to Nasdaq's computer systems without using a Nasdaq Workstation. The CTCI interface is based on the Common Message Switch protocol.
8. OTTO (OUCH To Trade Options) – With OTTO, customers can integrate NASDAQ into their proprietary network and place, execute or cancel orders. OTTO provides customers with a fast and highly efficient way to connect to Nasdaq for trading options. This protocol allows subscribers to efficiently enter options orders into and receive executions from NASDAQ. OTTO, like OUCH, was developed with simplicity in mind — subscribers and their software developers can integrate NASDAQ into their proprietary trading systems or build custom front-ends to NASDAQ. OTTO accepts limit orders from system subscribers, and if there is a matching order, the orders will execute. Non-matching orders are added to the limit order book, a database of available limit orders, where they are matched in price-time priority. OTTO only provides a method for subscribers to send orders and receive status updates on those orders.
9. ITCH protocols makes it possible for subscribers to track status of orders from the time it is entered until the time it is either executed or canceled. NASDAQ offers a historical record of the order and trade transaction data from the TotalView-ITCH data feed. Subscribers to this historical product may download the TotalView-ITCH daily transaction logs on a T+1 basis from a secured website or FTP server.
Daffodil Software possess an extensive experience in developing performance obsessed fintech applications. Please visit our Fintech application development services to know more about our service offerings.
