Desktop Systems
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NQB Electronic Pink Sheets
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"Dot Com-ing" a Wall Street Institution
In 1913, the National Quotation Bureau (NQB) began publishing lists of small domestic stocks and foreign securities for over-the-counter trading. Known as the Pink Sheets for the color of the paper on which they were printed, the daily and weekly lists contained only the names of the securities along with the market-makers and their phone numbers. To buy or sell a security, traders were required to solicit quotes from at least three market-makers.
While the Pink Sheets provided a valuable avenue for smaller companies to generate capital, the printed information was quickly outdated, and the time-consuming processing of calling for quotes constricted trading activity. In addition, the ever-increasing popularity of on-line financial services resulted in even more demand for a better, faster way to distribute securities information.
In 1998, the NQB made the bold move to bring the venerable Pink Sheets into the age of electronic commerce. The company turned to Random Walk Computing, a Sun Authorized Java Center, to develop and deploy a solution that would allow market-makers to publish bids and offers in real-time to a subscription-based Web page.
With the new Electronic Quotation Service (EQS), traders gain access to accurate, up-to-the-minute market maker quotes for Pink Sheet securities, making it easier and faster for them to lock in the best price for their customers. By simplifying and accelerating the old paper-based process, the new EQS solution is stimulating interest in smaller securities.
Developing a Robust Financial Application for the Future
NQB chairman Cromwell Coulson had a vision of transforming the paper-based Pink Sheets into a powerful, Web-based financial information platform. With that in mind, he laid out specific requirements for the technologies to be used in developing the electronic Pink Sheets.
"I knew we needed to be object-oriented, and we wanted to use open standards as much as possible," says Coulson. "We looked at other development platforms, but Java™ technology just seemed to be a natural fit with what we wanted to do."
The NQB hired Random Walk, a recognized expert in creating innovative financial applications, to develop and deploy the full architecture. The resulting solution encompasses end-to-end Java technology in an n-tiered contribute-distribute model.
The new solution incorporates technologies for reliable performance, high availability, and scalability to support thousands of simultaneous users. Because it is based on open standards and object-oriented components, the EQS platform integrates easily with NQB's existing enterprise information systems, while remaining flexible enough for future enhancements.
"We looked at other development platforms, but Java just seemed to be a natural fit with what we wanted to do."
Powerful, reliable workstations and servers from Sun Microsystems, as well as Solaris™ Operating Environment software, provide the rock-solid foundation for the new n-tiered solution. During the planning and development stages, Random Walk's certified Java technology architects worked closely with Sun Professional Services experts to design an underlying network architecture that would support the NQB's requirements for fast response times and continuous server accessibility.
The EQS solution is deployed on multiple Sun Enterprise™ 250 and Ultra™ 5 servers, running the Solaris Operating Environment. Qualified market-makers contribute their information to the system through a Java technology-based client application available over the web or a private extranet.
At the server end, a high speed quote processing engine assembles the information and distributes it to subscribing stock traders. Wall Street developers Javelin Technologies developed a custom engine based on the industry standard Financial Information eXchange (FIX) protocol for firms to link the EQS into their in-house systems. While the actual trades must still be executed via telephone, the automated contribute-distribute model essentially provides 24-hour accessibility to real-time financial information.
Adding Value to Over-The-Counter Markets
With approximately 4,000 small-cap securities currently listed, Pink Sheet stocks account for nearly $600 million of daily trading activity. The deployment of the electronic Pink Sheet system, as well as impending changes in securities trading regulations, set the stage for a tremendous increase in activity for this important over-the-counter (OTC) financial market.
The NQB The NQB's Coulson sees the EQS as an essential component for continued growth of small-cap markets, and sees Java technology as essential to future improvements in electronic financial services. "As our technology demands grow, I expect the capabilities of Java technology to grow with us," Coulson says.
About National Quotation Bureau
Established in 1913, the National Quotation Bureau (www.nqb.com) performs a valuable service to OTC markets by increasing the competition and price transparency through the collection and redistribution of information. NQB‘s exclusive OTC Inter-dealer Quotation Services, the Pink Sheets and the Yellow Sheets increase order flow to OTC Market Makers and provide best execution to buyers and sellers of OTC equities and taxable bonds. NQB is not a stock exchange or regulated entity.
About Random Walk Computing
Founded in 1995, Random Walk Computing (www.randomwalk.com) provides custom-made solutions based on the Java platform and related technologies for brokerages, investment banks, and other Wall Street firms. As a Sun Authorized Java Center, the company maintains a staff of developers and architecture specialists certified in the latest Java technologies, and works closely with Sun Microsystems to offer innovative solutions to the global financial services market.
