September 2011 - sponsored by: Streambase, Sybase
Talk Is Cheap
Like it or not, high-frequency trading (HFT) is here to stay. Regardless of what the regulators might be saying about the practice in order to placate the various constituents they represent, HFT plays such a crucial role in mature financial markets-and, increasingly, in emerging markets too-that it's inconceivable that they are ever going to get to the point where they seriously contemplate clipping HFT firms' wings. Anyone who has been part of the financial services industry for any appreciable amount of time will know that talk is cheap. Sure, we might, see "speed limits" imposed in the interest of promoting a fair and competitive marketplace, but who gets to say how fast is too fast and who draws that arbitrary line in the sand is anyone's guess. But that's a discussion for another time.
Complex event processing (CEP), the practice of low-latency filtering, correlating, aggregating, and computing, based on a wide range of historical and real-time streaming data, plays a significant role in firms' abilities to make judicious trading decisions. Buy-side and sell-side firms, especially those with high-frequency businesses, are under increasing competitive pressure to execute large trade volumes with the minimum amount of latency, a scenario exacerbated by an ever-expanding financial services industry generating massive data volumes from a vast array of disparate sources.
Not only is it unfeasible to expect humans to monitor all of this data, but it's also massively time-consuming to the point of rendering any high-frequency business obsolete. But this is where CEP comes into its own, which, as we see in this special report, has permeated the lucrative foreign-exchange (FX) market from its natural starting point of equities. But the latest generation of CEP products are about more than simply processing and interpreting large quantities of data: Many such offerings now include liquidity aggregation, algorithmic trading, risk management and surveillance tools, providing users with a one-stop shop to not only access the "cleanest" liquidity, but also to work orders and manage their risk in increasingly sophisticated fashions.
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