Rising market data volumes are nothing new – so why are they suddenly such a problem?
By Jeff Hudson, CEO, Vhayu.

The rise in market data volumes is becoming overwhelming. The time and cost of capturing, storing and moving market data is bringing consumers and market data users to their knees. One might well ask: what is the cause of all this? And, more pertinently, why are tick data volumes, which have always been on the rise, such a problem now?

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Everyone is keen to climb on the low latency bandwagon. This is due to several factors, not least the exponential growth in market and trade data volumes that exchanges and financial institutions are having to process. Others include the growth in derivatives and algorithmic trading, the scores of new assets and asset classes being traded, and the increase in the number of players in the financial markets, particularly in emerging economies.

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As market data volumes have exploded during the past 10 years and securities trading infrastructure has become increasingly strained, it has been firms’ networking teams that have come to the rescue by adapting technology innovations. But while Multicast, Gigabit Ethernet, better routers and switches and recently both 10 GB Ethernet and Infiniband have enabled the surge in market data, data management software infrastructure has contributed very little. Middleware messaging technology has indeed adopted multicast infrastructure to vastly improve market data consumer scalability, but the underlying improvements come directly from networking hardware advancements rather than software innovation. And multicast is often more a curse than a blessing – allowing only relatively coarse-grained distribution channels, providing less reliability than TCP/IP and negatively impacting the TCP/IP traffic of many mission critical applications on the shared corporate network.

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Market data requirements within financial firms are creating a perfect storm of complexity. The business is seeing an unprecedented doubling and tripling in quote volumes just as algorithmic specialists are asking for latency rates approaching the limits of physics. Operations will no longer let IT throw more and more servers at every problem as limits on rack space and power consumption within data centres become very real.

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The recent increases in global execution volumes have catapulted real-time analytical event processing to the forefront of investment securities trading technology. In order to create and maintain a competitive advantage, electronic trading institutions insist that their systems utilize a high-performance, low latency processing platform that is easy to develop, deploy, extend and integrate. Complex event processing (CEP) technology is now emerging as a solution to these key challenges.

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Last month, we considered why post-trade reporting in a MiFID environment will be substantially different to the way it’s done today. In this article, we’ll look at two other misconceptions about MiFID reporting.

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