Ask anyone who’s driven a Tesla (I haven’t) what impresses them most, and their answer typically isn’t anything to do with its eco-credentials, but rather the sheer acceleration that the car delivers when you squeeze the gas pedal.
Tesla was founded in 2003, the same year I started covering market data and reference data topics for Inside Market Data. And over the past 15-plus years, speed and power have been just as forceful a driver of change in the financial data world as they have in Tesla’s own development.
One of the biggest changes in market data is the speed at which that data is transmitted between marketplaces, vendors, and consumers. Back then, latency was only just emerging as an issue, latency monitoring was in its infancy, and direct exchange feeds were only just beginning to circumvent data vendors. Human traders and desktop terminals still outnumbered algorithms, and market data platforms were generally the long-forgotten TIB and Triarch platforms.
In 2005, firms eschewed running trading strategies from co-located datacenters. But within a couple of years, everyone was doing it, driving an explosion of demand for datacenter space as exchanges also moved in. Network providers sank fortunes into building the straightest, fastest routes between market centers to eke out every last ounce of physical latency, first using the newest fiber-optic technologies, then building wireless networks that were even faster than fiber. And trading firms lapped it up, knowing a tiny speed advantage could land a big win.
There’s also the speed at which these technical advances have taken place. Technology development has accelerated rapidly, but so has the pace at which startups can create new data services—especially so-called “alternative data,” which exploits datasets often collected originally for other purposes and presents them in a way that can be consumed by financial models to give traders an inside advantage.
But it’s not just about speed. Any caricature of a finance mogul craves power, the ultimate aphrodisiac. Yet for years, the world of data that supports their trading decisions lacked a powerful voice at the table.
Rare were the “wise and inspirational” managers like John Nicoll—who once said of static data staff to a young Chris Johnson (now senior product manager for market data at HSBC Securities Services): “They have the most important job in the firm. They have to get everything right, or nothing in the firm works.” And the function struggled for recognition until high-profile chief data officer appointments, such as John Bottega at Citigroup and Peter Serenita at JP Morgan, gave a public face to data issues in the boardroom.
The global financial crisis and ensuing uptick in regulation also bolstered reference data’s cause. To meet updated regulatory reporting requirements, firms must be able to provide accurate and timely reports. To generate these reports, it is imperative that a firm’s data is well organized, clean and accurate, and easily accessible. Now, firms can expect the full wrath of regulators if they fail to demonstrate that they have their data house in order.
And as we see firms looking to the evolution of that CDO role (often in conjunction with a chief digital officer), and how a CDO can be not just a governor of internal data, but a purveyor of data nuggets from a firm’s proprietary datasets, data quality becomes paramount to a potential revenue stream: you can’t throw some flour, butter and milk into an oven and call it cake. Data is like baking: it’s messy and time consuming, and if you want to offer a full range of baked goods, you should hire a baker.
By merging Inside Data Management into Waters magazine, which will now be rebadged under the WatersTechnology brand, we’re going to bake you a smorgasbord of financial markets technology and data stories that you can really sink your teeth into. Information is power; having access to it all in one place brings speed to that power.
Inside Data Management may be in the rearview mirror, but join us as we put our foot down and accelerate towards the new WatersTechnology.
The founder and CEO of Imperative Execution looks at how trade execution is changing and what that means for the buy side.Subscribe to Weekly Wrap emails
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