Max Bowie: From High Performance to High Octane

Marketing executives in the financial technology and market data industries love to use imagery of Formula One cars to promote their products. And it’s no surprise: the speed, the performance, the risk, the glitz and glamor. Both industries depend on operating at peak performance to create a winning strategy amid intense competition.

And being a huge F1 fan, I was thrilled to have NBC Sports F1 commentators Steve Matchett and Leigh Diffey as guest speakers and presenters of this year’s Inside Market Data and Inside Reference Data awards to describe the parallels to an audience of our readers.

While the speed of F1 cars is perhaps the most-overused cliché, it’s far from the only one. For example, just as trading firms must carefully monitor factors like value-at-risk and deposit margin with marketplaces, prospective F1 teams must pay millions of dollars to the sport’s governing body before they are allowed to compete, as a guarantee that they have the serious funding required to see them through a season in the sport. And  like in finance, to do more than just compete—which will cost at least a $20 million endeavor for even the most penny-pinching team (several of which are reportedly in dire financial straits)—one needs to make continual upgrades and investment to maintain peak performance, which don’t come cheap. Gone are the days of “gentlemen racers” and privateer teams that would turn up for a few races and then depart, as in the 1960s and 1970s. 

Another change from that era is safety: Back then, crowds were close to the track and separated from the asphalt only by hay bales; drivers and track marshals were routinely injured or worse. Now, tracks have been upgraded at a cost of billions with large run-off areas to protect spectators and slow an out-of-control car. A padded “collar” around the driver’s cockpit prevents drivers from being thrown from side to side like rag dolls in the event of a crash, while the HANS (Head and Neck Support) device that connects to the rear of drivers’ helmets prevents their heads from being thrown forwards and backwards under the g-force loads of cornering, accelerating, decelerating, and impact. The monocoque “cocoon” in which the driver sits must pass rigorous crash tests, and teams are experimenting with enclosed cockpit devices designed to prevent drivers from being hit by debris.

And in finance, authorities have made similar efforts to protect participants and investors—though like in F1, it usually takes an horrific event (like the pit lane fire that engulfed  Jos Verstappen’s Benetton F1 car at Hockenheim in 1994, where Steve Matchett was rear jack operator) to spur protective measures. Both industries are ruled by uncompromising governing bodies that impose strict rules and seem to take pleasure in enforcing them. But whether you think of an F1 driver as the pilot of a wheeled missile or derivatives as “weapons of mass destruction,” you understand why so much regulation is important. And in a trading environment, speed of data and execution is important, though arguably brakes and a steering wheel are more important than top speed alone.

In finance, authorities have made similar efforts to protect participants and investors—though like in F1, it usually takes an horrific event to spur protective measures

Collecting and Processing

And last but certainly not least is the sheer volume of data that the F1 teams collect and process in real time: timing data, information from sensors on the cars, which the teams collect and send from whatever track they’re at around the world to the teams’ home bases (mostly in the UK) for analysis, the results of which are then sent back to the trackside to be incorporated into race strategy, or to warn the team and driver that a component might be near breaking point. 

In fact, one shot inside a pit garage at the recent Spanish Grand Prix showed half a dozen or so members of one team intently watching banks of data monitors for some anomaly or opportunity. I couldn’t help think of a trading floor. And I couldn’t help think that there must be much that these industries can learn from one another. So perhaps our awards helped convert some more fans to F1, and perhaps it will inspire market data professionals to think about some of their challenges in a different way.