How Newton Trading Platform Achieves Reliable Transaction Tracking with Formance

Customer Context

Newton, one of the leading crypto exchange platforms in Canada, manages a diverse portfolio of over 70 cryptocurrencies and stocks. The platform processes daily transactions exceeding $10 million. In light of this, Newton was looking to accommodate its platform to be able to process an increasing volume of daily transactions at scale and to keep up with its rapidly expanding user base and broadening service offerings.

As a FINTRAC* regulated investing platform, they needed a robust solution to align with regulators' requirements to accurately track every asset and money movement, including user balances, sub-accounts, and trade history.

*Financial Transactions and Reports Analysis Centre of Canada - financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor

Challenges

Newton initiated their operations with an internal ledger system, which quickly began to outgrow its original capabilities due to increasing transaction volumes. To manage the detailed tracking of their product's financial activities on a larger scale, alongside introducing new products and assets, they recognized the need for an enhanced system. The company needed to manage the large number of complex transaction types that are inherent to trading platforms, as well as ensure an accurate accounting of the fees, settlements, and adjustments involved. For this purpose, they were looking for a solution that could offer flexible account architecture to make it possible to model granular transactions states or complex account hierarchy

At this point, Newton faced the critical decision of whether to build or buy, aiming to identify a comprehensive solution. They soon understood that building a scalable ledger in-house would be a substantial effort, requiring additional engineers, extensive development, testing phases, and continuous upkeep.

Indeed, to do so, many challenges needed to be tackled such as data immutability, enforcing double-entry accounting, security, performance, maintenance & deployment, data integrity, connectivity to General Ledger Accounting tools and more.

Recognizing the need for a more efficient and specialized solution, Newton turned to Formance, a trusted partner in financial infrastructure.

Why Formance

There were several compelling reasons why Newton chose Formance over other options available in the market:

Results

Newton’s experience with Formance exceeded their expectations. Newton's team received comprehensive onboarding, empowering them with the best practices to model a proper chart of accounts tailored to their specific business and reporting needs. Scalability and reliability were key criteria for Newton in their decision process and they were successfully met with Formance: Newton’s performance target was 50ms p95 and reliability target was 99.9%. Over the last month they have seen an average p95 of 26ms, with min and max p95 at 3.4ms and 40ms respectively.

Regarding the implementation, connecting Formance to their existing data lake using industry standard tools like Kafka message broker made it easy to integrate ledger data into new and existing financial reporting for both internal use and external audits. Ensuring that this fundamental aspect of their financial infrastructure adhered to stringent audit and regulatory standards was crucial, particularly in alignment with FINTRAC regulations.

Looking ahead, Newton has ambitious plans to further leverage the Formance platform. While initially utilizing Formance’s ledger for internal audits and reporting, they now intend to grow this capacity at the same time as integrating their payment rails with Formance, streamlining their payment processes and facilitating automated reconciliation.