In recent years, there’s been a distinct shift towards the use of open technologies in the financial markets, especially when it comes to market data projects. Indeed, the benefits of using open technology such as OpenMama
from NYSE in market data systems are so significant that CIOs cannot afford to ignore them.
The use of open source in trading systems is at an interesting stage. Financial markets participants are now starting to look at open technologies for financial markets, particularly those targeted at trading, to supplement the general open source systems
they are already using, such as Linux, Apache and MQ systems.
The increased take-up of open source is primarily down to two major business drivers: reducing vendor lock-in and easier recruitment, both of which can lead to significant cost reductions.
One of the main attractions of open source technologies is that a financial institution does not have to be ‘locked-in’ to a particular vendor. Having the flexibility to change providers is an important force for cost reduction and guarantees a high level
of service quality. It is important to note here that this cost reduction is not driven directly from the fact that the source code is available free of charge to the financial institution. In general, such companies prefer to buy support from an external
vendor. The critical influencing factor is that the market for such support and development is now contestable.
Vendors in contestable markets must remain responsive to customer demand, which puts their customers in the driving seat. These customers will increasingly shape the future landscape for market data by working collaboratively together with a range of competing
vendors to share ideas and drive innovation across financial markets. Open source is community led, so businesses will need to focus on breaking down silos and ‘bringing the outside in’ to leverage full value across the enterprise.
The release of market data systems which use open source technology, such as OpenMama, and their strong uptake by the industry therefore present an opportunity for CIOs to improve their levels of customer satisfaction
whilst reducing their costs that is simply too good to miss.
By adopting technology which is widely used in the developer community, financial institutions can also ease their recruitment headaches, as more staff will have gained experience of this technology when compared to in-house or niche systems.
So in summary, actual access to the source code does not really make a difference to customers. What does make a huge difference to customers is access to the source code by competing vendors, within the context of a ‘fair’ governance structure.