MEMX: Market as a Service

Market as a Service: A New Model to Transform Exchange Performance

Long term partnerships and world class reliability require forward thinking engagement models, writes David Mellor of MEMX.

In the past 25 years, the exchange landscape has become more competitive than at any point in the previous century. An industry that began 400 years ago is being transformed by technology that has moved from a supporting function, to a strategic differentiator. As exchanges strive to deliver liquidity, information and confidence, their underlying infrastructure becomes a critical factor in determining their appeal to members.

Reliability may not be the flashiest topic in financial technology, but it is unequivocally the most important. For exchange operators, reliability is not just about uptime it is about trust. Clients rely on exchanges not only to execute trades but to provide credible, uninterrupted access to market data. Predictability builds client confidence and reduces operational risk.

At the heart of this reliability is the engineering of the matching engine.  In an environment where exchanges are expected to be up 100% of the time, even minor outages can erode market share and damage reputations. Uptime applies not only in trade execution but also to data dissemination. Clients need to know the information they receive is accurate, timely, and consistent.

Strength through elasticity

The right architecture for an exchange supports long-term growth by ensuring that performance remains stable even under stress. This is particularly critical in today’s fragmented market environment, where exchanges must compete on more complex pricing and latency sensitive services to different market participants.

The wider the base of users, the more diverse the set of instruments that are selected to trade. Multi-instrument and multi-asset capabilities allowing exchanges and venues to offer cash products for equities and fixed income alongside derivatives, on a unified platform. This flexibility is crucial for operators looking to expand their product offerings or enter new markets.

Understanding clients’ strategic goals over the longer term is key, and the ability to follow the growth of exchange traded products (ETPs) and their cross over with the underlying instruments can make or break a trading venue’s future potential. Customisation and strategic alignment of an exchange’s offering with those of its clients is emerging as a valuable attribute.
 

The art of the possible

If the technology underpinning an exchange allows it to tailor its trading environment to specific use cases, whether supporting dark pools, auction mechanisms, or bespoke order types, the platform needs accommodate an exchange’s diverse requirements without compromising performance.

Speed-to-market is increasingly vital, especially as new exchanges seek to differentiate themselves with niche offerings, or a focus on a specific asset class or region. Using technology with a modular design supports rapid deployment, enabling operators to go live in weeks rather than months seizing opportunities as they present themselves.

Legacy technology can be a barrier to developing a dynamic new exchange. Being more rigid, expensive to maintain, and ill-suited for exponential growth, legacy systems require periodic ‘big bang’ upgrades that disrupt operations and introduce new risks.

The most limiting element here is software ‘mortality’; the need to refresh systems in their entirety to create a generational difference and evolve the exchange’s services.
 

Building With an Eye Toward the Future

Getting past this barrier requires a new deployment model that supports more dynamic deployment of capabilities, without a reliance on disruptive, monolithic changes to the core systems.

The ‘market-as-a-service’ model eliminates this pain by offering elasticity, scaling resources up or down as needed, and delivering incremental improvements without increasing downtime. It moves beyond traditional software licensing to offer exchanges a fully managed, continuously upgraded platform, providing operational support while lowering costs and reducing risk.

Breaking free of ‘software mortality’ moves an enterprise into the realm of ‘software immortality’. Unlike traditional software, which suffers from a fixed lifespan and eventual obsolescence, market-as-a-service ensures that a platform evolves continuously and removes clunky generational changes. This not only enhances performance but future-proofs the exchange against technological shifts.

Aligning technology with client strategy

The best technology is about deployment as much as it is about systems. It offers more than tools, it offers enablement. By understanding the strategic goals of its clients, whether they are launching a new exchange, expanding into new asset classes, or optimising existing operations, they need a provider that delivers solutions that support those ambitions.

Technology should be a facilitator, not a constraint, with an architecture that allows clients to innovate without being held back by legacy limitations. This is particularly important in a market where differentiation increasingly comes from strategic positioning rather than technical specifications alone, with direction, speed and strength of build all fundamental factors in the delivery of an effective strategy.

As exchanges face increasing pressure to innovate, reduce costs, and maintain trust, platform providers can offer a blueprint for success, in partnership with the vision of the exchange leadership. By aligning technology with strategic goals and embracing continuous improvement, exchange operators can not only survive but thrive in a rapidly evolving capital markers landscape.