As the quantity of data for trading grows exponentially, it is creating challenges for the industry and its regulators. Computing experts descended upon the Times Center in New York City on Tuesday to discuss some of the issues caused by the explosion of data in the financial markets.
The event, produced by Tabb Forum, saw panelists make a number of startling predictions, including that regulators will soon be able to track and record every equity trade made.
Daryan Dehghanpisheh, director of the financial services and institutions team at Intel, said as the industry becomes more complex, investing in more efficient infrastructure is vital. While data is important to all traders, he noted that it is far more important for some strategies than for others.
“It’s about what you do with the data,” said Dehghanpisheh. “How you think about data if you are a latency arbitrager is completely different from if you are a global macro fund.”
Most startling, however, was Dehghanpisheh’s comments about the improved ability to track and store information. Soon, the government will have the capability to monitor every single equity trade and to store that data indefinitely, he said. Though the cost of doing that might seem to be prohibitively expensive, those costs are coming down, and they could soon be within reach for regulators.
“That day is coming quicker than you think,” Dehghanpisheh said.
Speaking on another panel, Scott Ignall, chief technology officer of Lightspeed Financial, said financial firms are becoming a lot more amenable to using off-site firms to store their data. Still, there is a lot of skepticism in the finance sector about cloud computing, in which firms share resources and store information on remote servers.
“It’s control,” Ignall said. “The industry has been built on this entrepreneurial spirit of controlling your own applications, your own network, your own everything.”
But the industry is learning that when it gives up some of that control and stores its data remotely, it can have cheaper access to larger amounts of data while still maintaining security. In fact, Jeff Bell, chief executive officer of Wedbush’s Lime Brokerage, said more and more firms have been coming to him saying they don’t want to manage their own infrastructure.
Much of that attitude comes from a desire for cost containment. Firms don’t want to have to upgrade all of their technology every three years, and outsourcing data can make financial sense. The main barrier to using the latest off-site technology, cloud computing, is security concerns.
W. Brennan Carley, global head of the Thomson Reuters Elektron platform, said the cloud is not quite ready for trading applications, though his firm has already chosen not to own its own physical data centers. Wedbush is using the cloud to deploy strategy development software, and Ignall said the increased use of iPads and other tablets could push trading into the cloud.
That might seem like pie in the sky to some, but Chris Concannon, a partner with electronic trading firm Virtu Financial, noted that the industry has seen changes that were previously barely imaginable.
“Five years ago I looked at the markets and said, ‘We can’t get any faster,’” Concannon said.
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