July 2013 - sponsored by: S&P Capital IQ
Feed Me, See More!
I remember it like yesterday: my first story about banks bypassing consolidated feed providers and deploying internal ticker plants to capture and process raw feeds of exchange data. It was May 2004, and the story assembled comments from Inside Market Data's New York conference, where a panel predicted more firms would consolidate their own feeds using technology from specialist ticker plant vendors.
Alas, many of those vendors-including CMS Webview, Infodyne and Wombat Financial Software-are now gone, swallowed up by larger vendors looking for an edge, or out of business after struggling to stay afloat in an increasingly competitive market. And as traditional data vendors realized the potential impact of being displaced by exchanges, they built or acquired low-latency technologies to keep pace with their clients' needs and to exploit opportunities to insert themselves into the low-latency data flow.
Back in 2004, data consolidators combated disintermediation by pointing out the value they added through normalization and data quality. Little did I realize that the seed planted by those first direct feed pioneers would become a Little Shop of Horrors of competition over microseconds, and battles to handle high-volume data microbursts and traffic peaks in the millions of messages per second.
Now, these processes can be performed in split seconds by feed handlers and switches, using hardware-accelerated processors initially deployed to handle rapidly-rising market data rates, but which can also be used to perform high-volume repetitive processes.
Certainly, consolidated feeds provide more visibility than direct feeds from single venues, even if not as fast. Ultimately, the value of consolidated feeds is less in the process of consolidation-which anyone can do, should their developers have nothing more important to do-and more in the sheer array of exchanges, over-the-counter sources and proprietary and third-party datasets they can combine and distribute by connecting once to the source, and making its content available to their entire client base, leveraging their economies of scale and pricing their services accordingly, rather than each client connecting to every source themselves. And the potential for a raft of new venues emerging in the form of swap execution facilities-which will trade traditionally low-frequency over-the-counter instruments on exchange-like platforms-could present a bigger connectivity burden for potential participants, and could grant consolidated feeds a new lease of life.
Bill Murphy, CTO of Blackstone, once again joins the podcast to discuss the private equity firm's new offices, designed to house its innovations team.Subscribe to Weekly Wrap emails