China's Guosen Securities Selects Kx Database to Power Algo Trading System

Guosen Securities, a top tier investment bank in China, has signed an OEM license deal with Kx Systems for its kdb+ database. The deal marks Guosen’s move into algo trading and Kx’s first OEM arrangement in China where it already has other direct clients among local and international investment banks.

Guosen spent some time looking for a solution to power its algo trading system, but found standard database technologies, such as Sequel, C+ and Java, did not meet its needs. It then experimented with kdb+ and found that the product’s combined database and programming language could handle the data volumes and analysis needed to support algo trading. The OEM element of the contract will see the algo trading system based on kdb+ being part of Guosen’s offering to its institutional clients.

Hanxi Liu, general manager of Guosen Securities’ IT department, explains: “Choosing kdb+ was an important strategic decision for us. The sophistication of Kx’s programming language and the addition of its calculation engine to our new algo trading system provide us with a great competitive advantage and the optimal balance of speed and simplicity. Kx has made a serious commitment to the Asian market and its industry knowledge and superior solutions have made the company a serious contender in the local arena.”

Kdb+ is designed to allow vast amounts of data to be accessed and processed with minimal latency. The database has a single format for both real-time and historical data, and provides performance and flexibility for high volume, data intensive analytics and applications.

Chris Burke, Kx director of Asia Pacific, says: “What appealed to Guosen is kdb+’s execution speed on high data volumes and its highly productive programming environment compared with traditional technologies. Kx focuses on high performance, data intensive applications. A single architecture for all data optimises performance and, as the database has its own query language, analytics can run directly on the data.”

Guosen has worked with Hundsun, a supplier of order and execution management systems in China, to integrate the algo trading system with a Hundsun order management system and expects its first customers to go live on the algo platform this month. While these are early days for algo trading in China, Guosen is confident about client take-up and is targeting the OEM solution at the country’s top 100 fund managers.

Burke explains that while China is a few years behind western financial markets and will use algo technologies to support automated trading rather than high frequency, low latency trading, he does see development in China and across Asia.

“We are seeing rising data volumes across Asia, growth in algo trading and increasingly stringent, data intensive risk management processes. At the same time, companies are looking to drive down latency at all levels. The kdb+ platform was designed with this dual challenge in mind,” he says. Having set up an office in Hong Kong to serve the Asia Pacific market two years ago (see more on its strategy here), Burke says the investment has been justified by sales in the region.

As well as an OEM agreement with Guosen, Kx has an OEM deal with First Derivatives, which embeds kdb+ into its market data, complex event processing, algo trading and risk management applications, and a distribution arrangement covering German speaking areas of Europe with Symagon, a subsidiary of Frankfurt-based financial consulting firm Nagler (read more here).