Siac Adds Clients to SFTI Network; 35 Users Live

By Maria Trombly | Securities Industry News | June 30, 2003

The Securities Industry Automation Corp. announced last Thursday that it has signed up more than 100 customers for its new, secure optical network. The network, called the Secure Financial Transaction Infrastructure (SFTI), connects brokerage firms to brokers on the New York Stock Exchange and the American Stock Exchange, which co-own Siac. Some 35 firms are already connected to SFTI, Siac said. By 2004, 1,000 firms are expected to have switched over.

"This is a very smart move on Siac's part," said Damon Kovelsky, an analyst at Framingham, Mass.-based Financial Insights. "It's been a while in coming."

According to Kovelsky, the network that existed previously was old technology that badly needed an overhaul. Moreover, he said, the old network wasn't resilient, with many single points of failure.

"You don't need 9/11 to have a failure with a single point," he said. "You can have something as simple as someone tripping over a plug. With this new type of environment, it's going over multiple lines and the information will get there."
The new network, based on Nortel's optical ethernet technology, will offer interfaces of up to 10 gigabits per second, said Marco Pagani, president of optical marketing at Ottawa, Canada-based Nortel Networks Corp.

"This is a carrier-grade network," Pagani added. "When Siac decided to launch this, they had a couple of objectives. A dedicated communication infrastructure, and making sure that industry adds, moves and changes are done on the fly with great performance."

The SFTI infrastructure is comprised of multiple data centers and numerous access centers in the New York, Boston and Chicago area, interconnected by a fiber optic backbone, according to Siac. Last week, Siac announced that four financial extranets-Radianz, Savvis, TNS and its own subsidiary, Sector-have linked to SFTI's access centers, allowing customers of those extranets to connect directly to the access centers (Securities Industry News, June 23).

The backbone network is comprised of a Sonet ring running Resilient Packet Ring technology. This enables efficient use of network resources and flexible transport of the SFTI Ethernet traffic, while taking advantage of the inherent resiliency of the Sonet infrastructure, ensuring high reliability and availability, said Pagani.

He said all of the top Wall Street companies that interact with the NYSE or the Amex today have already decided to run their traffic over the new network, though he could not disclose any names.

"The events of Sept. 11, 2001, showed that the financial industry needed a more secure and reliable way to transmit data communications," said Siac's Steven Romano, SFTI general manager, in a statement.

Meanwhile, on Monday, the Depository Trust & Clearing Corp. announced the launch of its own expanded communications network, Securely Managed and Reliable Technology (Smart), which will provide customers with end-to-end connectivity support for all post-trade clearance, settlement and information-based services. According to the DTCC, Smart will be interoperable with SFTI.

DTCC now offers or will soon offer customers access to more than 60 specific services over its network, including post-trade clearing and settlement services for equities, custody and asset servicing, global corporate actions services, over-the-counter derivative matching service, networking and Internet services, fixed-income clearing and settlement services, including government and mortgage-backed securities and various repo products, mutual fund services, insurance services and international services.

SFTI will also improve connectivity with the Consolidated Tape Association and the Options Reporting Authority, Siac execs said.