Sponsored access and risk management

Most people assume that "naked access," the practice by which a sponsored entity enters trade directly on the market without any filtering by the broker-dealer, will soon be banned. That will force broker-dealers to either lose the business or figure out a way to provide access with the necessary checks in place.

Traders notes that this has led to a whole lot of vendor activity. Vendors such as FTEN, Mantara and Bon Trade Solutions and exchanges like NYSE Euronext and BATS Exchange are "in a race to develop and promote their risk monitoring capabilities to potential clients." Broker-dealers have a lot to sift through in a short amount of time. You don't want to get caught without a solution when the final ban is made real. One issue of course is speed. High-frequency traders (high-frequency trading news) are accustomed to lightning-fast executions and order entry. They will be swayed by risk monitoring solutions that impose the lowest latency possible.

For more:
- here's the Traders article

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