Opening Cross: Weather, Data Go to Extremes

As I write this, New York is bracing for record temperatures as the city sizzles in the midsummer heat. At the same time, the market data industry is bracing for record volumes on exchange data feeds—the Financial Information Forum’s June capacity statistics show new record peaks across 12 market feeds, with some showing record increases of up to 30 percent month-on-month.

These increases increase the connectivity burden required to capture and process all the data in a timely manner, while also prompting a need for solutions that allow firms to cut through the firehose of data to gain relevant insight.

So, for example, this week’s stories about how AboveNet is shortening its network connecting datacenters in the City of London and Slough, how Orange Trading Solutions is reducing latency on its route between New York and Brazil’s BM&F Bovespa both play to a broader trend of not just getting data from A to B faster, but achieving those speeds in the face of ever-increasing traffic volumes and bandwidth requirements.

But the increases in available market data also make it ever-more important to understand the data—which means being able to wade through vast quantities of information and sift through it with a fine-tooth comb at equivalent speeds. Hence, tools like Trade Alert’s instant messaging alerting function, which identifies relevant information about trading activity and provides it in a quick and easy-to-digest format, become increasingly valuable to traders looking for important nuances that give them an edge and help them spot trends that might not be apparent from the numbers alone.

Want proof? Look no further than the Accenture and New York City Investment Fund-sponsored FinTech Innovation Lab, which last Friday concluded a program to expose a select handful of technology companies to potential clients and investment opportunities than they may have been able to achieve on their own. Among the six companies given the star treatment by senior bank executives and chief information officers were New York-based risk analytics and data provider Hanweck Associates, Houston, TX-based data visualization provider Aqumin and startup CB Insights, which evaluates the health of small, private companies based on publicly available information on their activities. In short, half the companies on the list, as chosen by bank CIOs and venture capital firms, are involved in high-value analysis of complex or hard-to-find data.

And if that’s the prevailing trend, then Warburg Pincus-backed fixed income and derivatives startup Benchmark Solutions (IMD, Dec. 13, 2010)—which finally broke cover last week with its feed of prices for OTC asset classes derived and calculated from multiple inputs in real time—should be sitting pretty. The value of a service that provides value around these assets—and potentially avoid the kinds of situations that led to the credit crunch—cannot be understated.

At the other extreme are players like Chronos Research, which has struck a deal with infrastructure provider CFN Services to deploy its ultra-low-latency data and trading technologies in CFN’s co-location datacenters, while also making those technologies available to interested CFN clients via the network vendor’s Alpha managed platform of partner vendor services. However, boasting end-to-end latency of less than 5 microseconds—with further improvements expected from an upcoming processor upgrade—Chronos demonstrates that analytics and risk checks are not necessarily the nemesis of low latency.

Brooklyn-based Chronos will shortly move to Palo Alto, Calif., where its founders met at Stanford, which may disappoint the FinTech Innovation Lab organizers, who are trying to attract companies like this to locate in New York rather than Silicon Valley. On the other hand, while the Chronos team will be further from their potential clients on Wall Street, they’ll also be safe from the New York summer heatwave.