Costly Tech and Compliance, Meet Cost-Cutting Data Management
Electronic trades are getting faster and faster. Trading firms have to keep pace with each other.
But as executions trim to 1 microsecond, technology costs seem to be expanding boundlessly. Sybase marketing director — and fellow T&R blogger — Neil McGovern recently explored this in an opinion piece for A-Team Group.
“Firms must decide whether or not continue the race,” McGovern writes. “How many players can keep up when the cut¬ting edge of low-latency trading starts measuring in nanoseconds?”
Investors are not trading as often as they did before the financial crisis, according to London’s Financial Times, and many opt for less profit and lower margins. This is hitting Asian financial institutions in the pocketbooks.
Banks in places such as Australia, Hong Kong and Singapore may be further hamstrung by the Basel Committee on Banking Supervision’s international liquidity rules, which aim to avert another financial crisis. Reuters reports that banks in countries with low sovereign debt may find themselves competing with each other for the few bonds available on the market.
Constantly evolving technology and regulation will doubtlessly continue adding cost and concern to high frequency trading. But new IT frameworks may help capital markets keep costs down with a more efficient system for managing data.
The decades-old practice of adding application on top of application to manage data is inefficient, creating many copies of the same data. Historical analysis can be slower and less accurate when you cannot tell which copy is the most recent.
A new method of information management should draw upon a framework called Magnetic, Agile, Deep Analysis, or MAD, as Sybase CTO Irfan Khan explained to IT Business Edge. The next generation of data platforms would facilitate infrastructure sharing among applications and allow different applications to utilize the same data. It would also continuously query the information server, thus monitoring the rest of the enterprise for updates to related data sets.
The time and money saved with these cutting-edge data frameworks may not completely offset the costs of burgeoning technology and new regulation, but — as we know from shaving latency from each trade — every little bit helps.