Innovative timing solutions in technology
Author: Richard Hoptroff, CTO and Founder, Hoptroff
The finance industry has always been quick to innovate, from the ATM to online stock trading to contactless payments. Emerging technologies offer opportunities to reduce operating costs, refine business processes, and improve efficiency and financial services recognises the benefits that can come from being ahead of the curve. Traceable timing is one such innovation with a lot to offer.
Using digital ledgers to improve the traceability of data
Digital ledgers receive a lot of attention mostly for being the technology behind the high-profile cryptocurrency, Bitcoin. However, there is great scope for digital ledgers to be employed across other applications and Financial Services are only just beginning to tap into their potential.
By its nature, the Finance Sector demands the most secure mechanisms available to protect its sensitive data. Financial firms handle transactions that are not only enormous in value, but in number and frequency. It is no secret that banks no longer rely on physical records of their activities, or even gold to back their currency, the world runs on sequences of 1’s and 0’s on a computer system, so these computer systems must be incredibly reliable.
Digital ledgers’ system of encryption and linking of data into chains of events that cannot be edited or copied offers that reliability. The entries in the ledger are immutable and cross-published to third-party ledgers. If the ledger entries are changed, or the sequence of the entries is changed, the hash codes don’t match. The result is databases that everyone can trust.
The focus for a number of technology companies right now is developing ledgers that can bolt on to data, immutable in time and place, generating watermarks that not only guarantee the data is genuine, but also where and when it was created. This means that the native digital data now has a physical world verification embedded in it through the timestamp. By adding UTC (Universal Time) and location to blocks as they are created, we can ensure that these two vital parts of giving data a unique identity are fulfilled.
Traceable Time as a Service
TTaaS is one solution that synchronises your time and places an accurate timestamp on every piece of data that is transferred across a server so that it is traceable back to UTC and verifiable on a time log.
This technology has an immediate application in helping to enforce GDPR data protection regulations, creating an immutable record of where and when data may have been shared or used without an individuals’ permission, as well as the broader benefits of making data more traceable.
Atomic timing solutions and how they adhere to regulations
The benefit of atomic timing in Financial Services is not purely an opportunity on the horizon. Financial Services has some regulation in place to ensure its data can be trusted. This oversight comes in the form of MIFID II in the EU and CAT in the USA, requiring that all financial market participants have accurate synchronized timing on their trading servers.
If clocks on servers drift and are untraceable back to a verified source of universal time (UTC), conflicts can arise. Orders can look as if they arrived before they were sent, and there is no way to determine whose time was correct. The regulations stipulate that the clocks on servers must not vary from UTC by less than a millisecond, and in some cases by less than 100 microseconds. When a single delivery chain might involve many servers and that action is repeated thousands of times, then it is clear how lack of synchronisation will compromise the usefulness of timestamps when you are trying to reconstruct a chain of automated activities after an event.
Networked Precision Time Protocol – an innovation for finance making solutions more accurate and more efficient at reduced cost
The alternative to traditional NTP timing distribution, Precision Time Protocol (PTP), is generally superior in accuracy, to levels of microseconds at the application level in a server, traceability, because it is derived from a trusted time source (GPS or a dedicated time feed), and crypto-security. However, until now PTP has been costly to install and complex to maintain, because it needs continuous checking and adjustment to ensure accuracy and traceability are being maintained.
Innovation in the timing sector has perfected delivering PTP efficiently over fibre optic networks, making timing accessible to Finance firms with ease. It can be provided to a higher degree of accuracy, and at significantly lower cost. Software constantly monitors and adjusts server clocks to within the mandated range of UTC, and it is easy to scale up to new locations.
The Finance Industry cannot afford to take any chances with its sensitive data, the stakes are high and demand that Fintech be at the forefront of innovation. Affordable precision timing is ready for Finance, both to meet current regulations and to form part of a more traceable, secure, and resilient future for data management.
This article was originally published in Finance Derivative.
