Quality standard initiative for FinTech industry
Move to increase transparency and confidence in financial markets
A bold new initiative is being launched today that has the potential to benefit the entire financial technology industry – the Financial IT Quality Assessment (FIQA). This is intended as the cornerstone of a public, industry-wide framework for quality assessment of financial software and systems. To kick off the initiative, Cinnober Financial Technology is inviting influential players in the industry to participate in a working group, which is being convened in London on June 8.
The financial IT industry used to be on a par with the aviation industry from a quality standpoint, but in recent years many marketplaces and trading platforms have suffered from system outages and glitches that have generated front-page headlines.
The initial FIQA draft proposal includes a five-level classification based on an exponential scale of system size, with most national exchanges landing on level III and IV. A proposal overview with FIQA details is available for downloading here.
“As financial markets have become increasingly global, intertwined and complex, awareness of system quality should be more important than ever,” says Veronica Augustsson, CEO of Cinnober. “And we strongly believe that the actors in the financial industry are best qualified to establish a common framework for quality assessment. Many other technical sectors, such as the aviation industry, have benefitted from a global quality standard for years.”
“If the financial IT eco system – system vendors, buyers and users – pulls together on this, we will be able to increase transparency on quality and costs, and buyers will be able to ensure system quality matches their requirements. But in the end it’s really about improving the functioning of financial markets and eliminating the repeated system failures that erode confidence.”
The goal of the new standard is to help stakeholders in the financial industry achieve the best possible operational quality at the optimal cost, and provide tools to minimize and mitigate errors. With a standard in place, quality can be measured and well defined. Then it will be possible to compare quality and make business decisions about which level to invest in. This will enable actors to compete on the basis of quality in the long run. Customers ordering a new system should know what level of quality they are paying for. In operational mode, this will also maximize uptime and avoid costly and embarrassing outages. Using a FIQA standard, marketplaces and participants will be able to specify and request the level of quality and security that fits their specific needs.
The proposed FIQA standard is already being put to the test. In conjunction with a newly won customer, the Australian Securities Exchange (ASX), Cinnober will use it in guiding the design and implementation of replacement systems for this huge marketplace.
“One of the reasons ASX chose Cinnober to replace its equities and derivatives trading systems with a common platform was the intriguing way Cinnober frames quality issues,” says Tim Thurman, Chief Information Officer of ASX. “We are looking forward to implementing a system with quality specified according to a well-defined set of guidelines based on performance and cost. This promises to be a useful step for the entire industry.”
When complete, the FIQA standard shall be relevant and applicable for entities central and critical to financial markets such as market operators and clearinghouses, system software vendors, regulators, and anyone else involved in developing and deploying software for the financial sector. True to the Swedish origins of the initiators, it includes a “smorgasbord” of methods that can be used to reach well-defined levels of quality.