By Katherine Heires
Faced with shrinking budgets, buy- and sell-side firms around the world are struggling to keep pace with rising market data volumes, execution speed requirements and a greater range of information, according to a survey sponsored by StreamBase Systems, a provider of complex event processing (CEP) technology.
Fifty-eight percent of sell-side firms surveyed, and 50 percent of the buy side, cited cost reduction as their primary market data management objective this year. Rather than cutting back on technology expenditures, 33 percent of sell-side respondents and 27 percent of sell-side firms said they plan to pursue staff reductions to ease budgetary constraints.
Issued today, the survey was conducted in January by Bob Giffords, an independent banking and technology analyst based in the U.K. Of the 325 technology, trading and market data executives that took part, 39 percent were from buy-side firms and 32 percent from the sell side; the remainder represented exchanges and market infrastructure providers.
As consolidated equity option feeds in the U.S. climb above 1 million messages per second and European equities volumes continue to rise, firms are trying to obtain more access to data and greater technological capabilities at lower costs, says the study. With staff under such pressure, high-performance and high-productivity software for market data is becoming increasingly important, said Mark Palmer, CEO of StreamBase, in a prepared statement.
Despite the cutbacks, 46.5 percent of sell-side respondents and 33.6 percent of buy-side firms said they are looking for new cross-asset-class data vendors. And 43.1 percent of the sell side and 35.9 of the buy side said they plan to increase spending on low-latency data and related technology in 2009.
According to the survey, 43.1 percent of market participants said they would consider changing data providers this year, with two-thirds of those pointing to their budgets as a reason for switching. Half of those considering a move were motivated by data quality issues, while 32.9 percent cited the pursuit of wider market coverage through additional data sources or a better alternative. For those firms sticking with their current provider, potential business disruption was the most cited reason (50.6 percent), followed by lack of pressure from users (37.5 percent) and contractual ties (17 percent).
The StreamBase study noted a divergence between the buy and sell sides in the areas in which they plan to increase spending. Sell-side respondents listed data latency (43.1 percent), new technology such as hardware acceleration devices (36.1 percent), risk management (33.3 percent), new data feeds (29.2 percent) and complex event processing technology (25 percent). The buy side was focused on new data feeds (42.4 percent), low-latency technology (35.9 percent), asset-class expansion (31.5 percent), data from more regions (29.3 percent) and new technology (25 percent).
StreamBase announced March 1 that its CEP platform has been certified by New York-based Lime Brokerage, allowing it to connect to Limes market data feeds and order placement systems. George Hessler, EVP of Lime, noted that StreamBase is the second event processing vendor to earn a certification; SR Labs, a provider of high-speed electronic trading solutions, received approval in October.
The certification, which took several weeks to complete, according to Hessler, will open up StreamBases client base to traders interested in Limes low-latency capabilities and data feeds. There was clearly client demand for this, said Hessler, adding that a large trading firm client had requested StreamBases service.
This article was originally published on SecuritiesIndustry.com.
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