Rising Market Data Volumes Pose Electronic Trading Challenges, Aite Report Shows

Los Gatos,CA - 12 May 2009

An independent Aite Group research study advises that financial services firms confront the shortcomings of their existing enterprise data architectures today—before market data volumes once again ascend to the limits of technology’s capacity to support them when better markets return. The white paper, commissioned by Vhayu Technologies, the leading provider of enterprise tick data solutions, examines electronic trading trends associated with market data volume, and considers how those trends may evolve in the future. “Managing the Market Data Explosion” is available for download.

For this report, Aite Group conducted interviews with market data heads at 10 firms ranging from small, high frequency trading shops to some of the largest buy-side and sell-side firms in the world. They also spoke with several exchanges, hosting providers, and market data providers. Key findings include the following:
• Aite Group expects U.S. equities message traffic to double from current volumes in the next two years.
• U.S. equity data storage needs are currently growing 18% per month.
• Market fragmentation in Europe (and eventually Asia) will cause multiple repeats of current U.S. equities market data issues.
• Foreign exchange (FX) storage requirements are growing at twice the rate of equities storage requirements.
• There is a high level of interest by electronic trading firms to add unstructured content into trading models.

“While volatility and a pullback from equities have caused some recent slowing to occur, we expect markets to double data volumes in the next two years,” commented Adam Honoré, senior analyst at Aite Group. “While firms may currently be managing their infrastructure to support a two-to-one capacity ratio for accommodating existing peaks, smart planners are moving to three-to-one or even four-to-one ratios to prepare for future market needs.”

“To achieve success in the financial markets, firms need to cope with dramatic rises in market data without sacrificing system performance. Aite’s findings confirm the benefits of deploying an ultra performance platform like Vhayu Velocity, developed specifically for processing market data,” said Jeff Hudson, CEO of Vhayu Technologies. “It can also address increasing storage requirements in conjunction with Velocity Squeezer, the first hybrid hardware/software solution that delivers 4:1 data compression and 75% storage-related cost savings with no performance penalty and enterprise-level fault tolerance.”

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