Financial Trading System Development Process and Technology Selection Analysis

In our past collaborations with numerous licensed financial institutions in developing trading systems for Hong Kong, we have observed a common phenomenon: companies do not lack technology, but rather a clear process, logical planning, and compliance-oriented technology implementation methods. Therefore, this GTS article focuses on [Financial Trading System Development], outlining an easy-to-understand, executable development process and technology selection guide tailored to the Hong Kong market to help companies build complete trading system solutions.

I. Requirements Definition and Functional Planning Methodology

Hong Kong's financial market is extremely fast-paced, with high trading volumes, significant cross-border demand, and stringent regulatory requirements. Therefore, whether it's securities firms, asset management companies, or fintech companies building their own trading platforms, there are increasingly higher demands for low latency, stability, clear risk control, and auditability.

Many trading systems fail not because of technology, but because the initial requirements are vague and the boundaries are unclear. Therefore, the first step must be to analyze the "trading logic," "business processes," and "compliance regulations" together.

1.1 Four Core Requirements Overview

When collaborating with Hong Kong financial institutions, GTS typically breaks down the requirements into the following four points:

(1) Trading Logic Requirements: Which markets will be traded? (Hong Kong stocks, US stocks, A-shares, futures, crypto assets...) Is multiple product types and accounts required? Does it involve API-based programmatic trading or quantitative trading?

(2) Risk Control and Audit Requirements: What risks does the platform need to restrict in real time? Does it comply with SFC requirements for retaining trading and risk control records? Does it need to integrate with AML, KYC, and transaction monitoring modules?

(3) Operational Requirements: Is clearing and settlement required? Is an OMS (Order Management System) + EMS (Execution Management System) required? How should the backend permission hierarchy be constructed?

(4) Expansion Requirements: Will the platform connect to more markets in the future? Will it be cloud-based or support privatization? Will it support API access for external trading parties? 1.2 Define Functions by “Scenarios” rather than by “Function Lists”

The traditional method is to directly list functions and then develop them. This approach is flawed and carries high risk. The correct approach is to first clearly define the “scenarios,” such as: retail order placement scenario/institutional order placement scenario/high-frequency trading scenario/multi-market trading scenario/cross-border settlement scenario. Within each scenario, corresponding functions are then broken down. This ensures the system is “complete, non-duplicative, and non-conflicting,” a method commonly used by Hong Kong financial institutions.

II. Technical Architecture Selection and Development Environment Configuration

2.1 Three Principles of Technical Architecture:

First, stability is more important than speed. Many companies believe that low latency equals a good system, but in reality, “stability” is the most crucial requirement for a financial system. Hong Kong's market features T+0 settlement and high trading volume; a platform outage would have severe consequences.

Secondly, modularization is more secure than large platforms. Breaking down order placement, matching, risk control, clearing, and reporting into independent modules facilitates future expansion and maintenance.

Thirdly, auditability is essential. All operations, orders, modifications, etc., must be fully recorded in the backend, which is subject to audit by financial regulatory agencies.

2.2 Common Components of a System Architecture

A complete trading platform typically includes: a quote engine (responsible for market data), an order placement engine (responsible for pushing orders to the market), a matching logic (internal or market matching), a risk control module (limiting risk and blocking abnormal orders), a clearing system (calculating profits, losses, fees, and commissions), and an auditing system (maintaining records). Each module is independent and does not interfere with others.

2.3 Development Environment Selection

Recommendations

Hong Kong financial institutions generally prefer private or hybrid cloud deployments when building trading systems to ensure data sovereignty and compliance security. Databases prioritize high stability and horizontal scalability to support high-concurrency trading and real-time market data. Front-end technology focuses on speed and ease of use, prioritizing investor experience. API design maintains a unified format for seamless integration by brokerages, institutions, and quantitative traders. The overall goal is a secure, scalable, and auditable robust platform.

III. Hong Kong Regulatory Requirements and Compliance Technology Practices

The most important part of developing a Hong Kong financial system is compliance technology design. The following content is based on practical experience and does not constitute legal advice:

3.1 The Three Most Commonly Concerned Compliance Directions by Financial Institutions

(1) Transaction Records and Auditing: The system must be able to save order placement instructions, modified orders, reasons for order rejection, execution results, user IPs, login records, and system risk control interception records. The retention period must comply with regulatory requirements.

(2) Risk Control Must Be "Explainable": That is, why was the order rejected? Why were restrictions triggered? The backend must be able to clearly trace the causes of abnormal alarms and other issues.

(3) Data must not be arbitrarily modified or deleted: Therefore, immutable record mechanisms are commonly used, such as: logs cannot be deleted, modifications are traced, the system retains multiple versions, and blockchain is used for audit evidence preservation when necessary (an advanced option for some systems).

3.2 How the System Meets Hong Kong Regulatory Requirements

To meet Hong Kong regulatory requirements, the system adopts a separate architecture for the audit database and the business database to ensure that transaction and audit data do not interfere with each other; all risk control logic is written into an immutable audit log and is recorded. The backend is equipped with "query + export + report" functions, and login, operation, modification and other behaviors are fully traced, with daily routine health check reports. This design effectively improves the speed and reliability of the system passing compliance reviews.

IV. Deliverables List and Subsequent Maintenance Recommendations

When delivering projects to Hong Kong financial clients, we divide deliverables into two main categories: "technical deliverables" and "operational deliverables". 

4.1 Technical Deliverables (Examples)

System Architecture Documentation

API Documentation

User Manual

Risk Control Rules List

Operation Logs and Audit Rules

Deployment Checklist

Test Reports

Training Materials

4.2 Operational Deliverables (Examples)

Permission Hierarchy Planning

Quotation Supplier Integration Configuration

Clearing Report Template

Anomaly Alert Monitoring Process

System Change Management Process

After the financial trading system is officially launched, we recommend maintaining it in the following three aspects: First, monitor matching delays, API responses, quotation stability, and abnormal orders daily; second, conduct regular stress tests to ensure the system can handle a large number of orders during peak Hong Kong stock market opening hours; and third, ensure timely updates and synchronization at the compliance level, allowing the system to quickly adjust whenever regulatory requirements change.

Conclusion

Developing a financial trading system is not simply a technical project, but a comprehensive engineering endeavor involving technology, regulation, market structure, and business processes. By referring to the four frameworks outlined in this GTS article—requirements definition and scenario design, technology architecture selection, compliance-oriented development, and comprehensive delivery and maintenance—enterprises can build a secure, stable, scalable, and compliance-friendly trading system, maintaining competitiveness in Hong Kong's fast-paced and rigorous market environment.

• This article, "Financial Trading System Development Process and Technology Selection Analysis" was compiled and published by GTS Enterprise Systems and Software Custom Development Service Provider. For reprint, please indicate the source and link: https://www.globaltechlimited.com/news/post-id-1/