in financial markets
Investor confidence in the markets and all of its participants, exchanges, trading venues, broker dealers and regulators, is critical to our capital markets and the growth of businesses. Scila’s mission is to support investor confidence by providing tools to all market participants to quickly and effectively identify market abuse, risk or operational errors.
The company Scila was founded early 2008. All of the founders have a background either from surveillance departments or working with high-throughput transactional technology within the financial industry. Throughout the rapid growth of the Scila company a strong focus have been maintained on the recruitment of top-talent.
This solid base of superior domain and technology knowledge have been combined with a strategy of independence from any market participant and no reliance on external capital. This very much deliberate strategy gave Scila both the focus and freedom to develop innovative products that delivers true value to the customer.
Scila embraces the customer not only as the ultimate arbitrator of excellent products within surveillance and risk but also recognizes feedback and discussions with the customers as the valuable commodity it is. Scila considers the deployment of Scila Surveillance and Scila Risk at a new customer not an end in itself but as the starting point of a long partnership where the delivery of excellent support is just as important as the product itself.
Scila Surveillance and Scila Risk installations around the world constitute an important part of the overall structure at regulators, exchanges and firms that upholds market integrity, build confidence in markets and ultimately protects end investors.
Exchanges and Trading Venues
Confidence is fundamental for an exchange, and Scila technology is used by some of the leading exchanges and trading venues around the globe. Users include New York Stock Exchange and Deutsche Börse (Eurex and Xetra) among others.
Scila Surveillance is a high throughput real time system which can process millions of transactions per second. Clients can choose from a selection of 100+ alert rules and reports which can be customized.
Scila Risk gives the exchange a real time view of positions, sensitivities and portfolio risk. The risk calculations can either integrate with the clearing house risk system or provide a second opinion risk figure using a different algorithm. Risk calculations from different clearing silos can be integrated to give a cross-asset view.
Market Participants and Brokers
With new legislation and regulatory framework such as Market Abuse Regulation (MAR), REMIT and MIFID 2 there is an increased pressure on market participants (such as banks, trading firms and investment firms) and brokers when it concerns market surveillance and risk.
Scila Surveillance is a real time market surveillance system used by market participants and brokers trading a wide range of asset classes globally. A wide selection of industry standard alert rules and standard protocols for connectivity ensures a smooth implementation.
Scila Risk calculates position values and sensitivities in real time using several price models in parallel. Portfolio risk can also be calculated with different algorithms or different algorithm configurations in parallel. Risk calculations are continuously backtested against observed price changes. What-if calculations can be used to find the effect of a trade, market shift or risk model change and to predict margin requirements.
Regulatory Authorities in both financial and energy markets can use Scila Surveillance to monitor and prevent abuse by consolidating multiple platforms and exchanges to get a consolidated view of all transactions which fall under their jurisdiction.
Scila Risk provides regulators with a cross-exchange view of market participant risk. Portfolios can be aggregated or split in time, instrument or corporate hierarchy dimensions. Risk calculations can be made using historical positions and market data.
The systems are industry standard solutions by both exchanges as well as market participants. Output in the form of alerts, graphical analysis and transaction data can easily be exported into presentable evidence.
Scila Surveillance is a turnkey market surveillance solution for exchanges, trading participants and regulators that seeks to apply modern technology to obtain a seamless route from early detection of market abuse to presentable evidence. The solution covers all asset classes and market models and has been deployed for over 50 clients in 17 countries since 2008.
To meet the demands from the modern trading environment and changing regulatory landscape, Scila Surveillance not only monitors for traditional market abuse scenarios such as Spoofing, Layering and Insider Trading, but also for high frequency trading, pattern recognition (based on a wide range of trading statistics) and best execution compliance.
Scila Surveillance delivers shorter time-to-market, lower total cost-of-ownership and improved user experience. The result is a flexible and highly efficient solution with standardized connectivity protocols, capable of handling billions of transactions every day. The system can be deployed both on-premise or as a hosted option, including full application management. Scila delivers a technology that has proven to be extremely successful for some of the most demanding financial markets clients in the world.
In production asset class coverage include:
• Equity Derivatives
• Exchange Traded Products
• Energy and Emissions
• Fixed Income
• Money Markets
• Foreign Exchange
In production market model coverage include:
• Continuous Trading / On Exchange
• Over the Counter (OTC) / Off Exchange
• Voice Trading
• Request for Quote (RFQ)
• Auctions (including Open/Close, Fixings, Auxiliary Matching)
• Hybrid models based on combinations of the above
Equities and Derivatives Trading
Scila Surveillance includes Equities and Derivatives markets specific functionality such as the ability to overlay and consolidate fragmented markets (e.g. instruments traded on multiple exchanges / MTFs), use news feeds and e-communication data to detect Insider Trading and Front-Running, visualize Options series and Derivatives versus underlying Instruments and a wide range of specialised Derivatives alert rules.
Energy and Commodities Trading
Scila Surveillance includes Energy and Commodities markets specific functionality such as position monitoring, cross-market/product alert rules, merit order curve replay and standardised trade reporting. The system is designed to monitor trading of energy products in accordance with both Market Abuse Regulation (MAR) and the Regulation on Energy Market Integrity and Transparency (REMIT). Energy and Commodities trading clients include regulators, brokers and exchanges.
Fixed Income Trading
Scila Surveillance includes Fixed Income specific functionality such as Request for Quote (RFQ) and specialised auction support, theoretical pricing (used in both alert rules and overlays) and the ability to use historical reference and market data as benchmark for illiquid instruments. Fixed Income trading clients include exchanges and some of the largest Inter-Dealer Brokers globally.
Foreign Exchange Trading
Scila Surveillance includes Foreign Exchange specific functionality such as Request for Quote (RFQ), Streaming quotes, monitoring, abuse of last look, Front-Running, heat map and relation trading graph. The system fully supports Spot, Futures, Options and combinations (e.g. strategies) and can process millions of transactions per second in real time. Foreign Exchange trading clients include exchanges, large dealer platforms and brokers.
Scila Risk is a modern risk solution for market participants and operators that offers a real-time view of position valuations and portfolio risk and lets users drill down calculations to the underlying market data.
Scila Risk has been designed to support all types of asset classes, and the instrument library is continuously extended. Scila Risk supports both standardized exchange traded instruments and OTC deals and captures cross effects between standard and OTC trades.
Scila Risk lets users set up and monitor limits on all data that is processed or calculated by the system. Users can perform what-if simulations to see the effect of a hypothetical trade, a market shift or a model change. Risk results are continuously validated against observed market changes to identify problems in the risk models.
Scila Risk offers a modern web-based graphical user interface that removes the need for locally installed client applications. Scila Risk is built using microservices that communicate using standard technologies, which makes it easy to integrate Scila Risk in an existing environment and re-use existing price models or risk algorithms. The system can be deployed both on-premise or as a hosted solution.
• Real-time position valuations
• Real-time portfolio risk calculations
• Portfolio slicing and aggregation
• All asset classes in one screen
• Time warp portfolios or market data
• What-if calculations (modified trades, market data or models)
• Scheduled or ad-hoc calculations
• Drill-down analysis
• Limit monitoring
• Model validation
Supported standard instrument types:
• Equities, equity options
• Index futures and options
• Commodity futures and options
• Interest rate futures
• Bonds and bond futures
• F/X futures
Supported OTC trade types:
• Forward rate agreements
• Interest rate swaps
• Credit default swaps
• F/X forwards
• Flex Options
Preventing money laundering and terrorist financing remains a top priority of governments and global financial regulatory bodies. Escalation of these financial crimes has raised the need to comply with an increasingly stringent and complex regulatory climate.
This, in turn, demands effective and precise AML-solutions to facilitate detection for financial institutions to avoid being exposed to illegal activities while at the same time reduce cost of compliance.
Scila AML addresses these premises through accurate, automated surveillance which enables analysis and investigation of suspicious transactions and trading misconduct. The solution allows end-users to comply with regulation while detecting and managing fraudulent actions.
Scila AML is based on the same core as Scila Surveillance and provides both high-throughput real-time and historical processing of transactions and trade data through refined algorithms, producing AML-specific alerts and case reports for further investigation via fully integrated case management. Furthermore, Scila AML consists of benchmark alert rules that are based either on dynamic type of data, calculated on demand, or based on statistics and historical trends. The user is then able to follow benchmark statistics, take action and visualize through time series view, relationship graph and other tools.
Scila AML includes a flexible and configurable alert system which provides the ability to set up specific AML-rules according to the end-user’s explicit preferences and needs. Scila AML consists of AML-specific alert rules, covering specific potential anti-money laundering scenarios, such as high-volume deposits/withdrawals during a certain timeframe as well as private securities transactions. The specific parameters linked to the Scila AML alert rules, for instance check period, risk class, booking type or number of bookings, has the ability to cover multiple scenarios providing a high level of flexibility.
Scila AML also supports the integration of any available sanction, PEP or Terrorist Lists / Data Sources with full support for similarity and fuzzy matching algorithms.
New York Stock Exchange
New York Stock Exchange (NYSE), the world’s largest and most iconic exchange, is using Scila technology for real-time surveillance of all trading activity. NYSE has used Scila surveillance technology since 2014.
• Real-time market surveillance of Equities, Bonds, Options and Equity linked products (ETFs, ETNs etc)
• Scila Surveillance process up to 50 billion messages daily
• Scila Surveillance monitors Reg NMS and trade through compliance
Deutsche Börse Group
Deutsche Börse Group, one of Europe’s largest exchange groups and global leader in derivatives trading, is using Scila technology for real-time surveillance of all trading activity conducted on Eurex, Xetra and 360T. Deutsche Börse Group has used Scila surveillance technology since 2010.
• Real-time market surveillance of Xetra (Equities), Eurex (Derivatives) and 360T (Foreign Exchange)
• Scila Surveillance process up to 5 billion messages daily