Vendors: We Can Handle Opra Rates

The impact on users from market data and ticker plant vendors' plans for handling anticipated increases in market data volumes this year should be restricted to minimal increases in hardware, vendors tell Inside Market Data.

Last week, Boston-based consultancy Aite Group predicted that "2007 will see acceleration in data output across nearly every product... globally," particularly in the US options markets as a result of penny-quoting for options, increased equity volumes as a result of Reg NMS, and use of cross-asset algorithms that increase the quote-to-trade ratio.

Mike Dunne, chief technology officer at Activ Financial, says the vendor will be advising clients to increase the bandwidth that they allocate to options trade data via Activ from 30 megabits per second (mbps) to 48 mbps by July.

However, he says that this should not significantly impact most of Activ's clients, and that "In terms of coping with ever-increasing Opra [Options Price Reporting Authority] messages, our work has already been done."

"Our fundamental work last year was to support partitioning the Opra feed into two streams... to make it [run] across multiple CPUs," says Dunne. This means that to meet the rates projected by Opra for next month, clients should only need to install one additional CPU to support the feed handler that captures the Opra feed into Activ's ticker plant, and another to support Activ's last-value cache. Clients of the vendor's consolidated feed would not use a feed handler, so would only need one additional CPU, he says.

Similarly, Chicago-based data and trading software provider Townsend Analytics re-architected its software two years ago to be able to scale horizontally across servers, which means the vendor can currently handle the rates projected for next January "with headroom," officials say.

However, adding hardware is not a long-term solution to rising message rates. "At some point, that becomes a burden on your staff... and you start to run out of power, cooling and space in your data center," says Stuart Breslow, chief information officer at Townsend. "Another thing is network bandwidth, which—when you add in redundant lines—can get expensive," he says. "At some point, networks and data center capacity will become a gating factor."

ComStock, which carries full-tick and conflated Opra data, has already said that it will introduce a "more aggressive" algorithm next month to restrict the number of messages per second on its conflated feed to leave more bandwidth available for the full-tick option (IMD, Jan. 22).

Activ also has other plans in the works, though Dunne declines to give specific details. "We're looking hard at the increasing hardware footprint faced by clients, and are working on ways to substantially reduce that," he says.