UTP - new trading system on the Warsaw Stock Exchange
The trading system UTP (Universal Trading Platform) represents world-class quality in technology which will rank the Warsaw Stock Exchange among the most advanced global stock exchanges.
As of 15 April 2013, the Warsaw Stock Exchange operates a system which meets top global standards, addresses growing expectations of market participants and ensures organisation of trading in line with global trends. UTP developed by NYSE Technologies is well known to international investors and brokers on the world’s biggest markets – this trading platform is used by the NYSE Euronext stock exchanges in New York, Paris, Lisbon, Amsterdam and Brussels, as well as many stock markets.
Compared to the legacy system, UTP is much faster, more efficient and scalable, and offers much enhanced performance: it can handle several dozen times more orders in the same time (20 thousand orders per second v. ca. 850 orders per second in Warset). In addition, latency in UTP will be cut to under a millisecond. With UTP, the Polish capital market opens up to new groups of investors including large global investment firms engaged in algorithmic trading. Algorithmic trading already accounts for 40 to 60 percent of all trade globally and its share is most likely to grow further. This presents an opportunity for growth and gives local Exchange Members a chance to increase their revenues with the implementation of innovative solutions.
UTP for the Market
While algorithmic trading is a functionality mostly addressed to professional investors, yet individual investors can also use the strategy by means of algorithms offered by brokerage houses. Those investors who decide not to use algorithmic trading actively can also expect benefits: better liquidity and higher volumes, lower spreads resulting in lower transaction costs. Improved system performance will enhance the quality of market making operations as market makers can use bulk/mass quotes and support different classes of instruments. This, in turn, will improve the safety and comfort for investors.
Following the implementation of UTP, the Warsaw Stock Exchange will gradually introduce new segments of the derivatives market and new classes of assets that previously could not be marketed on a large scale due to the technical constraints of Warset, including stock options, interest rate futures, as well as commodity derivatives. As a result, the range of investment opportunities offered on the WSE will become much more diverse.
UTP Overall Architecture
Information for WSE’s business partners (Exchange Members, Data Vendors, Issuers)
All Exchange Members, local and international, can have access to the WSE’s trading system on the same terms from their internal systems. Exchange Members interested in even faster access to the WSE’s markets will be offered by the Exchange, at a later date, a paid service of High Performance Access (HPA) to be provided at the Exchange colocation centre.
UTP is a technological breakthrough but it does not entail any revolutionary change in the existing rules of trading. Thus, individual investors do not have to adapt to the new system. UTP offers a broader range of functionalities, new types and validity designations of orders, and supports trading of instruments in new market segments dedicated to specific product groups, e.g., warrants and structured products. However, this brings no functional changes for individual investors. Each instrument will continue to be traded in the continuous trading system or the single-price auction system (depending on classification decided by the WSE according to the existing criteria).