Digital Transformation in Derivatives Trading: From Monoliths to Event-Driven Microservices
Author(s): Prashant Singh
Publication #: 2506007
Date of Publication: 06.09.2021
Country: USA
Pages: 1-9
Published In: Volume 7 Issue 5 September-2021
DOI: https://doi.org/10.5281/zenodo.15614738
Abstract
Traditionally, the derivative’s trading business has been centered around big, monolithic architectures with high coupling of the components and rigid operational boundaries. While these systems delivered stability and continuity, the resulting loss of scalability, flexibility, and agility to rapidly absorb new business requirements was unbearable. Growing expectations for high-speed transaction processing, better system resiliency, deployment flexibility, and ever-closer alignment with rapid innovation mean that most financial services institutions are adopting a more modern digital transformation approach. At the heart of this change, microservices architecture and event-driven communication patterns are becoming the norm. Microservices support breaking down a monolithic application into small, decoupled services with distinct business functionalities. Event-driven architectures also improve the system's responsiveness and reliability of trading platforms by enabling asynchronous communications and services decoupling, thus reducing the cross-system failure and latency problems. This paper investigates how to move from legacy monolithic systems to event-driven microservices architectures in the field of derivatives trading platforms. It presents an in-depth analysis of principles, tools, methodologies, and best practices that financial institutions can apply and implement in their change management strategies. The research methodology is multiparadigm (Yin, 2009) through a combination of case study analysis, semi-structured interviews with industry experts, and analysis of system performance data. The results from the study highlight significant improvements, such as scaling throughput tremendously, making the system more fault-tolerant, deploying more frequently, and reducing operation costs after migrating to event-driven microservices. The paper also describes significant challenges organizations face in making such transitions, particularly maintaining a consistent data space, observability across a distributed system, and service orchestration. Through a framework and empirical validation, the study offers pragmatic advice to the industry space by which organizations might re-architect their trading infrastructures using microservices and event-driven design principles. The study also underscores the importance of a phased migration approach, organizational readiness, and strong governance models as critical success enablers when achieving digital transformation in derivatives trading.
Keywords:
Download/View Count: 54
Share this Article