Red Hat and Simudyne: Empowering stock exchanges with AI-driven market simulation

The ability to support workloads on an efficient and uninterrupted basis is especially applicable in the highly demanding financial sector—which seeks to gain competitive advantage by constantly analyzing market trends, executing trading decisions, and adjusting strategy based on access to real-time data. Additionally, the rise of agentic AI trading across asset classes necessitates advanced tools to manage risk effectively, optimize trading strategies, and manage regulatory compliance. 

Red Hat’s understanding of these complexities, in collaboration with Simudyne, provides cutting-edge solutions that can transform operational strategies in an ever-changing environment.

Simudyne and Red Hat enable innovation

Agentic AI is an AI system designed to interact with data and tools in a way that minimizes human intervention. In contrast with traditional workflows which only move forward, agentic workflows can move in both directions, with the ability to backtrack and mend errors.  Learning from previous patterns and data, it can alter strategy based on new or changing information in real time, enabling the ability to proactively anticipate needs and reflect on its own work.

Red Hat’s financial services partner, Simudyne, has developed Simudyne Pulse, a multi-agent (agentic AI)-driven platform which offers an advanced high frequency simulation solution for capital markets with the proven security components inherent in the OpenShift platform. 

“Simudyne is at the forefront of agentic AI in financial services. They create a digital twin of an exchange that accurately reflects real-life trading behavior, allowing financial firms to explore scenarios that have yet to occur. This goes beyond traditional backtesting, providing a powerful tool to evaluate and prepare for unprecedented market conditions.” Richard Harmon, VP & Global Head of Financial Services, Red Hat

Departing from traditional methods which relied heavily on historical data—often falling short in predicting future market behaviors—Simudyne Pulse creates a safe 'sandbox' environment where traders can rehearse and test strategies without risking real capital. Simudyne Pulse establishes a high-fidelity, agentic AI-driven replica of the exchange's own market, an innovative approach specifically designed for stock exchanges and financial institutions navigating the complexities of high-frequency trading of cash equities, derivatives, futures, and options. Capable of millisecond resolutions, Pulse is engineered to simulate intricate market dynamics with a high degree of precision.

By taking advantage of Red Hat OpenShift AI, Simudyne Pulse runs these simulations with the speed and reliability required for high-frequency trading environments. Red Hat OpenShift provides the enterprise-grade, cloud-native environment necessary for running Simudyne’s complex, high-fidelity market simulations. Scalable and security-focused infrastructure allows exchanges to test new protocols computationally, conduct robust market surveillance, and generate realistic synthetic data for training machine learning (ML) and AI models. This data is invaluable when real-world data is scarce or sensitive.

The resultant integrated solution unites Red Hat's robust, cloud-native infrastructure with Simudyne's sophisticated AI-powered simulation technology. 

Simudyne Pulse and OpenShift: a complementary collaboration

Deployment at major exchanges (e.g., the Hong Kong Exchanges and Clearing Limited and the London Stock Exchange Group) demonstrates innovation in practice. 

At the Hong Kong Stock Exchange, Red Hat OpenShift AI on AWS was implemented as a scalable cloud infrastructure to deliver a risk management solution—using multi-agent  simulations to evaluate daily margin risk exposures for the exchange across a wide range of potential market outcomes. The capability to utilize approaches which are modular, secure, and tailored to the venue provides trading firms with the tools they need to stay ahead in a competitive market.

Red Hat's commitment to open source technology enables exceptional flexibility and interoperability. Simudyne’s simulation solution can be deployed smoothly across different environments, helping to drive greater operational consistency and efficiency. Red Hat maintains a leadership position in the multicloud landscape, broadening infrastructure capabilities and platform appeal. This agility is crucial in a rapidly evolving financial landscape where adaptability is key.

Simudyne Pulse offers numerous benefits for security firms to simulate and refine trading models without risking capital:

• Enhanced risk management: simulation of various market conditions offers better assessment of market and liquidity risks, preparing for potential fluctuations.
• Regulatory compliance assurance: establishment of a controlled environment for testing algorithmic trades, ensuring regulatory compliance
• Optimizing trading strategies: using realistic conditions to test and refine high-frequency trading algorithms, accelerating development time and improving performance.
• Disorderly market testing: validation of algorithms to meet regulatory requirements by simulating extreme scenarios, ensuring resilience against market shocks.
• Synthetic data generation: creation of vast amounts of synthetic data that mirror real-world market patterns, essential for training ML/AI models.

Simudyne CEO, Justin Lyon, credits Red Hat and OpenShift AI as fundamental for the development and implementation of the Simudyne Pulse product. The robust scalability, flexible nature, and inherent security capabilities that Red Hat solutions can provide were vital in creating and deploying Simudyne’s proprietary and highly sensitive product. 

“OpenShift AI has been critical to our success and our ability to deploy our products into production environments…in major venues in Asia, Europe, and more broadly,” said Justin Lyon, CEO, Simudyne.

Specifically, the Red Hat OpenShift solution was able to support Simudyne through its:

• Scalability: facilitating resource scaling based on simulation demands.
• Reliability: demonstrating high availability and effective disaster recovery.
• Security: incorporating robust essential security measures, crucial for sensitive financial data.
• Operational efficiency: automating management tasks, reducing operational overhead.
• Developer productivity: streamlining application deployment and management.

Conclusion

Together, Red Hat and Simudyne better empower financial institutions to navigate the complexities of modern markets. By providing a high-fidelity replica of the market, down to microsecond-level price formation, this collaboration can transform theoretical models into actionable insights. With Red Hat OpenShift as the foundation, Simudyne Pulse offers robust, data-driven, decision-making capabilities, helping better prepare exchanges for the future of trading. To learn more how Red Hat and Simudyne can transform your operations, click here.

• Explore the Simudyne page in the Red Hat Ecosystem.
• Watch Richard Harmon, Red Hat, and Justin Lyon, Simudyne, discuss AI and market simulation risk in a 10 minute Coffee Break video.
• Contact financial services at Red Hat.