Why the world needs synchronised timing
If our ever-growing dependency on technology to operate, relax, and navigate the world is set to continue, accurate timing must become a global standard. The EU and the US are leading the way in the roll-out of synchronised timing by utilising its benefits in the financial services industry.
However, the value of timing goes far beyond just one sector and provides the opportunity to bolster the very fabric of our vital infrastructure.
For financial services, accurate timing is required by law: the Second Markets in Financial Instruments Directive (MIFID II) in the EU, and Consolidated Audit Trail (CAT) in the US. These regulations demand a sub-second accuracy of 100 microseconds and 50 milliseconds respectively. If all the devices in a distributed process don’t share the same time to sufficient accuracy, then the records they produce will put events in the wrong sequence and with incorrect intervals.
Clocks can easily drift, creating chasms of doubt in the data. Particularly in financial services, where thousands of transactions take place every second, the results of unsynchronised clocks can be chaotic. A transaction can appear to arrive at the recipient before it left the sender, two parties may disagree over the timeline of events and disputes cannot be easily resolved.
This is not solely a transatlantic concern. Regulators in Asia have acknowledged that MIFID II and CAT have had an influence on their operations through interactions with European and American partners. Deutsche Bank has affirmed this stating that the introduction of MIFID II was “felt globally”. Asia is also setting its sights on formulating their own regulations on financial services and algorithmic trading, following in the footsteps of MIFID II and CAT.
The traceable and immutable software solution
Traditionally, firms would meet these timing obligations by building a complex and expensive system of atomic clocks and antenna that require regular maintenance. Software has allowed companies to entirely do away with the hassle of handling this delicate infrastructure.
Software can provide the time feed, steer server clocks and produce compliance reports on demand. This new means of transmitting and utilising highly accurate timing is also incredibly reliable and can be traced all the way back to the original sources of UTC – both satellite and terrestrial. This revolutionary service has allowed Financial Services companies to meet the demands of this new generation of timing regulation quickly, easily, and cost effectively.
The future of timing
Synchronised time is now well established as a necessary component of the financial services infrastructure, but it holds significant potential for other sectors and applications. For example, how do you prove where digital events happened?
The answer is to turn place into time – time and space are inextricably linked. If a server tells some of its neighbours about an event, and the round-trip time of the message is measured and ledgered, we can be confident that the event happened where the server claims it did. This adds an additional layer of data validation and immutability.
This quality of data will become increasingly important as data protection regulations become tighter, the introduction of traceable time stamps and the verification and authentication they can bring means precision timing is becoming a global consideration.
In the wake of a pandemic that accelerated our trajectory even further into the virtual world, resilient and reliable timing has never been more important. Currently, most timing solutions rely on just one source of UTC, a GPS satellite signal. As technology has become more sophisticated, satellites have become far more vulnerable to spoofing, interference, and failure.
The new generation of software timing solutions has risen to this challenge and combines timing sources from three different satellites as well as a terrestrial stratum-zero time source. Highly accurate timing is becoming an essential component of global infrastructure and pioneers in timing are now ready to provide solutions that not only reduce cost and hassle, but increase resilience and reliability for financial services and beyond.