Business demands to outpace trading tech budgets in 2010 - Tabb
06 January 2010 | 9979 views | 0
Speed will continue to be the name of the game for US equity brokers in 2010 but business demands beyond latency may outpace trading technology budgets, according to a study from Tabb Group.
Tabb says that in addition to meeting increased latency reduction requirements, CIOs, CTOs and heads of technology at equity brokers are being asked to expand network capacity and make more efficient use of data centre space, with nearly half now consolidating or migrating centres.
According to the 24 sell side firms Tabb spoke to, cost and exchange proximity are the two primary drivers for sell-side selection of a data centre and over 60% now measure computer power utilisation in their centre.
Upgrades were the top infrastructure projects in 2009 with reliability and latency reduction the leading concerns for managers.
A major problem for many sell-side firms is keeping up with bandwidth requirements coming from exchanges and market data providers. Report author Kevin McPartland says: "It's not a matter of more efficient utilisation of bandwidth but simply having enough."
Meanwhile, with the average bulge bracket broker spending nearly $30 million annually on excess compute power, firms are now looking to increase utilisation of their share of the 93,000 sell-side servers running their US equities businesses.
McPartland argues that because a completely virtualised and highly utilised infrastructure is still years away for sell-side equities technology, a large gap exists between what is currently possible and actually done. In that same vein, cloud computing will be a part of equity IT strategies in the future but security concerns leave it more interesting than useful.
In conclusion, he says: "Operating data centres, servers and networks with the utmost efficiency will not be a trend but the only way to do business. In 2010, the winning brokers will be those that not only have the latest and greatest technology, but can manage it most efficiently."