“In with the New,” Says TABB Group in Forecasting Low-Latency Messaging Middleware Spending in 2007 at $95 Million, Rising to $168 Million by 2010

New York, NY - 20 November 2007

With the global equities and options markets producing an average of more than 7 billion messages a day in 2007, rising to more than 128 billion by 2010 according to estimates from TABB Group, the financial markets research and consulting firm, fast, robust and reliable delivery should become even more critical to the success of buy-side and sell-side institutions. While reducing latencies is now a necessity, legacy-messaging middleware has not kept pace, driving the move to newer, sub-millisecond solutions.

TABB Group, in a new research report released today, “Faster than a Speeding Bullet: The New, Low-Latency Messaging,” written by senior research analyst Kevin McPartland, believes that the messaging solutions that will have the most success are the ones that can maintain their high levels of throughput on the highest volume days.

“Many investment banks plan to double if not triple their budgets, driven by the need to capture every possible profit opportunity in the hyper-competitive trading markets,” says McPartland, adding, “This vote of confidence from major sell-side institutions will likely lead to smaller shops following suit in an effort to provide a significant value-added service sought after buy-side clients.

Based on interviews with buy-side and sell-side firms, with only 17% of investment managers currently using low-latency data feeds, TABB Group estimates the overall spend on low-latency infrastructures, including message buses, feed handlers, ticker plants, complex-event processors (CEPs), physical transport and data storage and the integration and customization of internal and external applications to reach $300 million in 2007, and that the market for low-latency messaging middleware to total $95 million in 2007, growing to $168 million in 2010, a three-year compound annual growth rate (CAGR) of 107%.

The new solutions, explains McPartland, will be delivered through the formation of tightly integrated teams encompassing market, software and hardware specialists to enable the more efficient creation of the most optimal low-latency infrastructures. Although feed handlers, ticker plants and CEP engines are key to a successful low-latency infrastructure, without the proper messaging solution, he says, “the environment will be no better than running a paper ticket down Broad Street. When it comes to low-latency messaging, one size definitely does not fit all.”

The 19-page research report with five exhibits, based on conversations with bulge-bracket broker-dealers, messaging-middleware providers and exchanges, covers software- and hardware-based messaging middleware as well as a hardware/software combination, the percentage of firms using low-latency data, costs relative to reduced latency and vendor selection guidelines.

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