The Brazilian stock exchange offers multiple ways for users to connect to their systems with low latencies. In this article we will detail what are the services offered by Bovespa and highlight the ways to set up low latency connections.
Stock Exchange Services
There are multiple services offered to investors and brokerage houses who intend to set up a low latency direct connection to BM&FBovespa, or the Brazilian stock exchange, infrastructure. These services are:
- Equity Trading
- Derivatives Trading
- Foreign Exchange Trading
- Government and Private Bonds Trading
- Treasury Direct Trading
- Receive BM&FBovespa Market Data
- CME Market Data
- Drop Copy
- Post Trading
- BM&FBovespa Settlement Bank
The availability of each service depends on the type of connection established by participants. Bovespa segment their system users into the following types:
- Distributors: brokers, broker-dealers and banks registered and compliant to their regulation
- DMA service providers: brokerage houses that offer market access services
- Technology infrastructure providers, which are the services that connect trading desks to the stock exchange systems.
Types of connections
Bovespa institutes a number of specifications for the five types of connections to their infrastructure: RCB, RCCF, VPN, Lan-colocation and PCM. Further details on the requirements for each connection can be found on a manual provided by the institution.
Rede de Comunicação BM&FBovespa
The RCB, or Rede de Comunicação BM&FBovespa, type of connection refers to the low-latency, scalable access to the stock exchange trading environment. Using this connection requires contacting the stock exchange to establish a commercial agreement and acquiring the service of two telecommunications carriers from a list specified by the institution, in order to maintain a reliable link to their systems. These carriers are:
- Algar Telecom
- CMA Telecom
- Embratel / Primesys
- Level 3
- Oi Telecomunicações
- UOL Diveo
- Vivo / Telefônica
The equipment specifications required for this type of connection include:
- Dark Fiber, DWDM, EoSDH or Metro Ethernet data transmission technologies
- Support for BGP Routing Protocol
- Support for hardware-based multicast
- PIM v2 Sparse Mode and IGMP v2
- First Hop Redundancy Protocol
- Feature Track
- NAT, if applicable
- Support for Quality of Service
There are multiple setups, or forms of access, suggested by Bovespa for RCB connections. These connections require contingency backup in the cases they serve distributors, DMA service providers and technology infrastructure providers. Some of the setups suggested by Bovespa are:
- Single distributor connected to two data centers using a different carrier for each
- Two Lan-to-Lan linked distributors connected to two data centers using a different carrier carrier for each
- Two Lan-to-Lan linked distributors using two carriers, each carrier linked to one of the two data centers
RCB connections must undergo certification by BM&FBovespa, which is available at only one of their data centers. Certification can be setup using a single link or two links using different carriers. Once certified and online, BM&FBovespa offers management and monitoring services to these connections, including alarm logging, issuing failure alerts, measuring traffic volumes and recommending equipment upgrades when necessary.
Rede de Comunicação da Comunidade Financeira
The Rede de Comunicação da Comunidade Financeira, or RCCF, type of connections refer to connectivity as a service offers that make use of a private network operated by telecommunications outsourcing company Embratel Primesys. Similar to RCB, this type of connection must undergo a certification process before becoming operational. RCCF access is divided into two options: RCCFv1 and RCCFv2.
RCCFv1 refers to a shared MPLS network provided by Embratel Primesys that are connected to BM&FBovespa’s 2 data centers using redundant local carriers and using 128-bit encryption algorythm to assure safety of data communications. RCCFv1 accesses are divided into standard and RCCFv1 without contingency backup. Only distributors, DMA service providers and technology infrastructure providers are required contingency backup when connecting through RCCFv1.
Standard RCCFv1 connections take place through two VPN’s, using two routers, switches and last-mile connections per distributor to assure data traffic in case one of them is unavailable. RCCFv1 connections without contingency backup take place through a single VPN, using a single router, switch and last-mile connection per distributor.
RCCFv2 refers to an IP network based on a Metro Ethernet Core provided by Embratel Primesys with links of up to 10Gbps. This connection enables simultaneous connectivity with trading and post-trading systems, complete management and monitoring of operations and rapid bandwidth upgrades if necessary. RCCFv2 accesses are divided into standard access, site contingency and total contingency.
Standard RCCFv2 accesses take place using two Metro Ethernet links from different carriers terminating in two routers. RCCFv2 site contingency accesses take place using a Metro Ethernet link and CPE unit per distributor site, which are connected to each other through a Lan-to-Lan link. RCCFv2 total contingency accesses take place using two CPE units per distributor site, each connected to a switch at the two BM&FBovespa data centers.
Internet Virtual Private Network
VPN connections are contracted directly with the BM&F Bovespa. All VPN connections require IPsec capable equipment and high-bandwidth internet connections which must be acquired by distributors. VPN accesses can be established through Lan-to-Lan or Lan-to-client connections.
Lan-to-Lan VPN connections are established and configured by distributors, which are responsible for their management, internet access and security. These connections require certification before becoming operational.
Lan-to-Client VPN connections have installation software distributed by BM&FBovespa, as well as an username and password that allows one connection per login, and are recommended for up to five connections.
The connection with lowest network latency offered by BM&FBovespa is LAN-colocation, in which distributors place their equipment in the same infrastructure as the stock exchange systems.
BM&FBovespa provides modules of half a rack, each module with two UTP cables and the necessary IP address and routing, while distributors are responsible for providing, installing, maintaining and supporting their equipment, which can be managed using RCB, RCCF or Internet VPN connections.
LAN co-location accesses are provided at 1Gbps over two UTP Cables, each connected to a different device in Bovespa’s data center, as to assure availability of physical resources and network equipment. Once set up, these connections can be monitored via the remote management system provided BM&FBovespa. Any anomalous behaviour detected in these platforms may result in temporary suspension of access to their infrastructure.
Market Data Connectivity Providers
Companies that provide market data have access to a specific type of connection to BM&FBovespa systems, called Market Data Connectivity, or PCM. These suppliers are connected to the stock exchange through RCB and provide the networks for access to the BM&FBovespa market data infrastructure. Customers who intend to acquire these data feeds must contact BM&FBovespa and with accredited provider British Telecommunications do Brasil.
Other types of Connections to Bovespa
Brokerage houses are also capable of receiving data feeds and connecting trading desks to exchange systems at BM&FBovespa using a network provided by a technology infrastructure provider. These companies must have established RCB or RCCFv2 connections to the stock exchange data centers.
Finance technology provider Rede de Telecomunicações para o Mercado, or RTM, established an agreement with BM&FBovespa in which participants of both systems are able to receive information from each other. These services must be contracted with each institution, and include market information feed for RTM participants and access to Sistema do Banco Central, Cetip and SELIC to participants of Bovespa.
Direct Market Access Models
Customers of authorized brokerage houses are able to access Derivatives and Equities trading systems through Direct Market Access, or DMA. These services are divided into multiple models, which are related to the type of connection to BM&FBovespa systems.
The first DMA model, or the traditional, home broker access, refers to the connection of the customer to the brokerage house infrastructure that enables orders to be sent to Bovespa systems. Through this model, it is also possible for customers to be connected to a DMA service provider, which in turn will send orders to the brokerage house systems and finally to the stock exchange. Brokerage houses that offer these connections must implement an Order Management System to control customer access to Bovespa’s systems.
Through Model 2, brokerage houses are able to be connected to stock exchange systems through DMA providers, which may or may not have its structure co-located with BM&FBovespa. In this model, customers connect to BM&FBovespa through the service providers, and not brokerage house systems, even though the brokerage houses are responsible for authorizing and suspending customer access to BM&FBovespa and monitoring their operations in real time.
The third DMA model refers to the direct access of customers to BM&FBovespa trading systems, without connections to brokerage house systems or DMA providers. As in other models, brokerage houses maintain responsibility for authorizing and suspending customer access to BM&FBovespa and monitoring their operations in real time when using this type of access.
The fourth model of DMA refers to the co-location of equipment in the space of BM&FBovespa infrastructure, which allows for customers or brokerage houses to operate Automatic Trading Systems remotely. Through this connection, customers are able to set parameters, manage and monitor equipment and carry out maintenance if required.