Solutions and Strategies for Going Forward in a Rapidly Evolving Market Data Environment (Technology Focus)

Across the globe regulators continue to introduce further rules for financial institutions. Several are targeted at promoting "best execution" and transparency around trading in a range of financial instruments. Hence, these regulations are placing immense pressure on market data infrastructures, while cost pressures are forcing the need for transformation.



Report Highlights
Market data rates have been doubling over the last 10 years, hence there is much pressure to ensure that financial services institutions' infrastructures can handle that kind of throughput. Firms should evaluate how they intend to store that data and preserve the time series order to allow staff to go back to it and run back tests and run through trading scenarios. As automated trading becomes increasingly cross-asset, so too must storage and analytic platforms to support cross-asset, next generation trading. Although some within the industry would argue this is straightforward, it is a complex process to provide these high performance tools with and meet the challenges of integrating the data.


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CATALYST 1
SUMMARY 1
ANALYSIS 2
Investment into market data infrastructures will continue to grow 2
Firstly, market data volumes are doubling annually thereby forcing capacity extension 2
Secondly, regulatory reforms are greatly impacting the market data landscape 2
Thirdly, competitive forces are taking effect 3
Fourthly, rather than members of staff, applications are the main consumers of market data, therefore infrastructure and speed have become paramount 3
Market data platforms must support firms' automated trading strategies 4
White box approach is the next generation in algorithmic trading 4
Maintaining data quality is a major hurdle throughout the trading lifecycle 5
Time series order is critical in today's environment 5
In memory databases open up the possibilities for advanced event processing capabilities 6
Traditional relational databases cannot cope with today's market data challenges 6
Market data platforms are evolving into next generation 'cross-asset' infrastructures 6
Industry may move to a central utility for storage and retrieval of market data 7
Market data infrastructure best practice guidelines 9
Definitions 11
Event processing 11
METHODOLOGY 11
Further reading 11
Ask the analyst 11

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Figure 1: Front office market data storage expenditure (US and European) ($m) 3

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