How is the exchange trading in Russia

We quite often hear news about what is happening on foreign exchanges. The London Stock Exchange and NASDAQ seem to be familiar even to web users who are far from stock trading. Often, these news stories tell about the success of foreign financiers, in particular, in the field of technology - records of transaction speed, performance, or, conversely, equipment or software failures. As a result, it seems that foreign platforms are the most technologically advanced in the world.

And what about us? In addition to repeated from year to year words about the need to create an international financial center in the country, it would seem that there are no special gestures in this area. On the one hand, this is true; on the other hand, the domestic stock market is much more interesting than it is customary to think about. And it is interesting, first of all, from a technological point of view.

Scheme of the stock market

We will move from simple to complex and, to begin with, we will consider a somewhat simplified generalized scheme of work of the exchange branch of the Russian Federation.
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Exchange

The main element of the system is, in fact, the exchange itself - the platform on which the purchase / sale operations take place. At the same time, when it was possible to meet vocal brokers at the stock exchange, who shouted offers of the best price, went far into the past.

Now all the main activity of the exchange is conducted in data centers with powerful servers that host the core of the trading system and software for all kinds of accounting.

Earlier in Russia there were two large stock exchanges - MICEX and RTS, but in mid-December 2011 they merged (in fact, the RTS was absorbed by a competitor). The resulting platform was first called MICEX-RTS, and then received the more harmonious name "Moscow Exchange" (Moscow Exchange).



This largest domestic stock exchange trades in securities, currency, futures, options, gold, shares of exchange-traded funds and other financial instruments. Another worth mentioning is the St. Petersburg International Commodity and Raw Materials Exchange, where oil, oil products and futures are traded.

In Russia, as well as abroad (everyone is familiar with the DowJones index), there are stock indexes: the RTS Index and the MICEX Index , and there are also indices of various industrial sectors (the so-called sectoral indices). The most popular and interesting from a technological point of view is the derivatives market, there are also currency, stock and commodity markets.

Brokers

An ordinary person cannot trade directly on the stock exchange just like that - the legislation of all countries is arranged and ours is not an exception. To make operations with securities or other financial instruments, you must use the services of an intermediary - a broker who has access to the desired market. It is the broker that clients carry money, open accounts with him and give him instructions for the execution of a transaction. That is, you, using a trading terminal or voice on the phone, ask the broker to buy such and such paper for you. And this order is sent to the stock exchange, but on behalf of the broker, who will then calculate your profit or loss on the transaction in his own system.

Infrastructure brokers deserve special mention. First of all, in order for the application to go to the exchange, it must be sent there. For this purpose, special software is used - exchange gateways, which receive applications sent by users via trading terminals via the Internet, connect to exchange gateways and transfer data to them and, along the way, write them to the database.

Much attention is paid to security: each transaction must be authenticated by the user, for this, an electronic digital signature (EDS) is used for online trading, which brokers must integrate into their products. Usually, a “signature” of transactions occurs once a month, when a report is electronically presented to the user, which he certifies with his key.

In addition, according to the law, the broker is obliged to report to the client on the transactions performed, therefore, a powerful back office is also necessary. The issue of hardware is also noteworthy - for example, when developing the new ITinvest trading system, we used IBMDataPower products, which we will separately discuss in one of the following articles.

Customers

The stock market combines different categories of traders: here are professional traders with years of experience, and novices and technologists who rely on special trading algorithms.



In addition to the professional background, all traders are distinguished by their commitment to one or another style of trading, which is expressed in the method of opening and closing positions (making deals), the duration of holding positions, and so on:

• The day trader (day trader) makes deals primarily within one trading session and does not leave “uncovered positions” (for example, unsold or non-repurchased securities) for the night, fearing a change in market conditions and unpredictable price fluctuations during the time the stock exchange is closed or not in the market.
• Scalpers make many trades for a short period of time: from a couple of seconds to several minutes. The profit from each such transaction is usually small. the price does not have time to change much, which implies a large number of operations.
• Position traders make averages for the duration of the transaction, getting rid of the assets before the periods of liquidity reduction (for example, holidays).
• Medium-term traders perform several operations per year.
• Long-term investor transactions can last for several years, and they close them only when global trends in the market change.

In online trading, basically, there are the first three types of traders. At the same time, day traders and scalpers usually have regular market participants, and various funds and financial organizations adhere to positional, medium-term or long-term strategies.

What trade

In general, traders on the exchange can be divided by the type of software used. Some of them trade manually using trading terminals, both universal type Quik, and available only when working with a specific broker (for example, SmartX), others use special programs for trading - trading robots that implement their trading strategies.



Mobile devices are also used for trading and viewing stock data.

Many brokers open access to their systems to third-party developers through an API, which has a positive effect on the number of various programs and applications for online trading. In addition, using the API, each client can develop their own trading robot that implements a unique strategy for market behavior.

By the way, if you suddenly have a desire to try what it is like to trade on the stock exchange, then this can be done quite safely thanks to the service of a unified stock exchange called test access . The user is provided with a virtual account, virtual money, and the ability to use real infrastructure - including the brokerage API.

That's all for today. In the following articles, we will take a closer look at topics such as the brokerage systems API, the importance of application processing speed and direct connection technology (bypassing brokerage systems), financial data transfer protocols and much more. Follow the announcements!