Time is money: robust business clock time sync compliance reporting in financial trading

Failure to comply with international timestamping standards can incur severe fines for financial firms. So how best to avoid violations, ensure compliance, and contribute to an equitable and transparent trading landscape?
Stock trading numbers

To safeguard the integrity of global financial systems, regulatory bodies such as FINRA’s CAT NMS in the US and ESMA’s MiFID II in the EU have imposed strict rules on the accuracy of timestamping financial trading transactions. MiFID II, for example, stipulates that business clock synchronization must be accurate to 1 microsecond for electronic transactions and be traceable to Coordinated Universal Time (UTC). And in the US, CAT NMS rules state that business clocks should be synchronized to within 50 milliseconds of the time maintained by the National Institute of Standards and Technology (NIST).

Here’s an executive summary of global business clock requirements:

Requirements US  EU
Regulator FINRA ESMA
Standard CAT NMS
Timestamp granularity 1ms 1µs for HFT/1ms for non HFT
Trader clock accuracy
Exchange clock accuracy            100µs 100µs
Clock sync deviation 50ms from NIST  100µs from UTC
Clock traceability To NIST thru GPS/GNSS To UTC thru GPS/GNSS
Records for audits Stored for up to seven years or more for regulatory forensics Stored for 5 years for regulatory forensics
Clock compliance Proof of accuracy/deviation reporting through stored client logs


But this isn’t the end of the story. Compliance tools also play a crucial role in meeting the robust standards set out by regulatory bodies, which are then enforced through unanticipated audits. Compliance tools track, record and measure deviation for each transaction. By analyzing patterns and detecting anomalies, these tools can generate insightful, detailed reports that help auditors identify suspicious activities or violations of financial regulations.

Key features of an ideal compliance reporting tool

To help meet the demands of ever-evolving regulatory environments, compliance reporting tools must be adaptable and scalable. As each financial institution has unique needs and processes, they should also be readily customizable and be able to track the business clock’s timestamping of thousands of servers and virtual machines, all running critical and time-sensitive trading applications, including algorithmic trading.

Effective compliance reporting should also possess several other key characteristics:

  1. Security: The solution must safeguard data integrity and prevent unauthorized data manipulation, tampering or loss.
  2. Reliability: It should consistently provide accurate, verifiable timestamps and other transaction data.
  3. Vendor-agnostic: The tool should seamlessly integrate with various NTP and PTP software clients and monitor the traceability of any vendor’s GPS/GNSS grandmaster, safeguarding legacy investment.
  4. Resiliency: US Executive Order 13905 outlines the need to swiftly deploy mitigation controls in critical financial infrastructure in the event of GPS/GNSS disruption. Assured positioning navigation and timing (aPNT) solutions detect malicious and unintended disturbances to GNSS, and provide fault-tolerant mitigation. By leveraging atomic cesium clocks they also provide extended holdover capability in case of GPS/GNSS loss.
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A comprehensive solution for any compliance need

The Adtran Oscilloquartz Time Sync Compliance Assurance (TSCA) tool is an integrated module of our intelligent Ensemble Controller platform. It aligns with international standards, including MiFID II and CAT NMS, ensuring financial institutions can confidently comply with regulatory requirements. It’s designed to be secure, vendor-agnostic, resilient, and versatile, offering a range of benefits to support compliance efforts in case of regulatory audits, helping financial institutions save time and avoid stiff fines.
One of the key functions of our compliance reporting tool is its ability to verify timestamp accuracy, traceability and deviation to ensure precise and reliable timestamps. What’s more, it’s equipped with AI-capable and vendor-agnostic GNSS assurance, protecting third-party GNSS timing receivers inside any vendor’s grandmaster from cyberattacks that can affect GPS/GNSS traceability. Moreover, it can automatically detect jamming, spoofing and hacking activities to safeguard critical financial trading infrastructure. In addition, our TSCA tool issues alerts to notify relevant parties of any discrepancies, allowing for prompt action to be taken.
Recording and reporting time sync logs from all trading servers and virtual machines is another area where our compliance reporting tool excels. We provide robust capabilities for recording and reporting logs, offering comprehensive insights into financial trading activities. With the ability to generate multi-year reports, our solution ensures that historical time sync records can be readily accessed for up to seven or more years, providing valuable proof of timestamping accuracy and traceability in the event of an unexpected audit.

Navigating an increasingly complex regulatory environment

In the ever-changing landscape of financial regulations, our reliable and adaptable compliance reporting tool keeps financial institutions on the right side of regulatory standards. It ensures operational integrity, meets regulatory obligations and minimizes the risk of fines, violations and reputational harm.
We recognize the significance of a fair and transparent financial trading environment, and our TSCA tool is purpose-built to uphold these principles. Now, financial firms can more confidently navigate the complex regulatory landscape, providing value to clients while effectively managing potential compliance risks.

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