Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Why Brokerage Firms Need Custom Observability?

3 min read

Observability is a critical component for ensuring smooth operations and compliance in brokerage firms. For these firms, managing vast amounts of data and complex trading systems is a daily challenge. Observability helps in understanding the internal state of systems, facilitating quick identification and resolution of issues. Let’s explore why custom observability solutions are essential for brokerage firms and how they address unique challenges in this sector.

Understanding the Constraints of Brokerage Firms

Brokerage firms operate under numerous constraints that make standard observability solutions inadequate:

  1. High Volume of Heterogeneous Data: Brokerage firms handle data from millions of transactions across various asset classes, requiring robust systems to manage and analyze this information efficiently.
  2. Ever-Evolving Trading Interfaces: Continuous updates to mobile and web applications demand observability solutions that can adapt and monitor new features seamlessly.
  3. Minimal Fault Tolerance: Dealing with clients’ money means there’s virtually no room for errors, necessitating highly reliable systems.
  4. Sizable Support Staff: To address client queries and issues promptly, brokerage firms need comprehensive monitoring tools.
  5. Dedicated Mobile and Web App Teams: These teams require specific insights into application performance to ensure a smooth user experience.

Client Requirements

Brokerage firms serve millions of clients who expect a seamless and intuitive trading experience. Given the direct handling of clients’ money, even minor errors can lead to significant trust issues. Firms must provide:

  • Smooth, Intuitive Trading Experiences: Interfaces must be user-friendly and error-free to maintain client satisfaction.
  • High Volume Data Handling: Systems must efficiently process and analyze vast amounts of transaction data.
  • Robust Support Systems: Quick resolution of client issues requires detailed insights into system performance and user interactions.

Exchange Requirements & Regulations

Brokerage firms operate under strict regulatory standards set by authorities like SEBI, which mandate regular audits and compliance requirements. These firms must generate accurate reports, maintain extensive records, and ensure seamless communication with exchanges for order placement and market data. Handling large volumes of data daily, often amounting to gigabytes or even terabytes, requires latency-sensitive systems that can efficiently process and store customer data for audits and analysis. Maintaining compatibility with various data exchange protocols and quickly adapting to regulatory changes are essential to ensuring operational compliance and efficiency.

The Role of Observability

Observability encompasses metrics, logs, and traces, providing a comprehensive view of system performance and behavior. For brokerage firms, it is crucial for:

  • Ensuring System Reliability and Performance: Proactive monitoring helps in maintaining uptime and identifying potential issues before they affect users.
  • Facilitating Compliance and Regulatory Reporting: Detailed logs and metrics support the generation of accurate reports required for audits.
  • Enhancing Customer Support and Satisfaction: Observability tools help in quickly resolving client issues by providing detailed insights into system behavior.

Challenges with Off-the-Shelf Observability Solutions

Standard observability tools often fail to meet the specific needs of brokerage firms due to several key limitations. Data security concerns arise from the necessity of sending sensitive customer data to third-party vendors, posing significant risks. Additionally, generic observability tools lack the tailored insights required for the unique operations of brokerage firms. The high volume of data generated by these firms leads to prohibitive costs with many third-party solutions, as vendors typically charge based on the amount of data ingested. Furthermore, dependency on a single vendor’s APIs and tools can result in vendor lock-in, limiting flexibility and potentially increasing costs over time if prices are raised.

Incerto’s Custom Observability: A Tailored Solution

Incerto offers a custom observability solution designed specifically for brokerage firms, addressing the limitations of off-the-shelf tools:

  • Data Security: Implementing observability on your infrastructure ensures complete control over data.
  • Custom Insights: Tailored to meet the specific needs of brokerage firms, Incerto provides deep, industry-specific insights.
  • Fixed Costs: Predictable expenses for setup and management help in budget planning.
  • No Vendor Lock-In: Utilizing open-source tools like OpenTelemetry, Grafana, and ClickHouse ensures flexibility and control.

How Incerto Addresses Brokerage Firm Needs

Incerto’s custom observability solution meets the unique requirements of brokerage firms by offering:

  • Comprehensive Data Security: Observability is implemented on your infrastructure, ensuring data privacy and security.
  • Customizable Observability Stack: Using OpenTelemetry, Grafana, and ClickHouse, Incerto provides a flexible and scalable solution.
  • Flexible and Scalable Solutions: The observability stack can adapt to changing needs and evolving interfaces.

Custom observability is crucial for brokerage firms to ensure system reliability, compliance, and client satisfaction. Incerto provides a comprehensive, secure, and cost-effective solution tailored to the unique needs of brokerage firms. By implementing a custom observability solution, brokerage firms can enhance their operational efficiency and maintain the trust of their clients.

Real-World Success: Fyers and Incerto

An excellent example of the effectiveness of custom observability is the case of Fyers. After migrating from major players to Incerto’s observability stack, Fyers achieved an 85% cost reduction and gained 100% control over their data. This shift allowed them to separate data and insights, unlocking the power of customized dashboards that solve exact problems like compliance, business analytics, debugging, and ensuring uptime.

As Anurag Pandey, Co-founder of Incerto, puts it:

“We helped Fyers achieve 85% cost cut, 100% control after they migrated from major players to Incerto’s observability stack. The key? A simple yet pivotal insight – Take control of your data.

This success story underscores the value of adopting a custom observability solution with Incerto, providing brokerage firms with the tools they need to thrive in a competitive and regulated environment.

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

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