Discussions at this year’s Trade Tech conference are set to debate a wide range of subjects important to capital markets. In addition to the inevitable debates around high frequency trading (HFT) or transaction cost analysis (TCA), we can anticipate discussion about reference data, socially-powered algorithms and multi-asset execution and order management systems.
A common thread will be sheer volume of data that each of these practices either uses or produces. References to terabytes of data are being replaced with petabytes and even exabytes (1 million terabytes). To give you an idea sense of scale, Google processes more than 1 petabyte (1PB) of data every hour.
As the worlds of exchanges and trading adopt ever-more sophisticated forms of trading technology, we can see that the regulatory requirements surrounding the storage and analysis of data will increase. We believe this will create an unprecedented drive for financial services firms to store and process data in an ever-more efficient and cost-effective manner.
Does the industry have the robust, flexible and agile infrastructure needed to support data handling demands?
From the many conversations we are having across the industry, we believe every financial services firm is considering how to better handle its data today, how to prepare for the exponential increase anticipated and how to ensure that it meets its ‘disaster recovery’ requirements and regulatory obligations.
Firms face a choice. Either to store data on-premise in their ‘comms room’, outsource to a data centre / collocation facility, or a combination of both. It all depends on the business model of the firm, the ambition of anticipated growth and the scale of required data handling. Whatever the site, firms are seeking resilient, reliable and flexible storage. Not only do financial services firms need a back-up ‘DR’ plan, but the sites themselves must be fully resilient and backed up. Confidence is critical.
Can comms room continue to cut it?
We would say this wouldn’t we, but we are not alone in this claim. Data centres are deemed to be an essential part of financial and industry infrastructure: the nerve centres of modern business, housing the servers, storage and networks. This is partly due to the scale of the demand as the industry becomes ever more electronic, partly due to the efficiencies on offer. As every CFO and CTO will testify, resources need to be managed diligently today and managing the certain uncertainty of any financial services data requirements tomorrow, needs careful consideration and cost control.
Our discussions with financial services firms weighing up comms rooms versus data centre options focus on a number of requirements ranging from internal resource and expertise, to cost management, resilience of power and connectivity and also location. Each firm will put different store on their storage and management needs, but broadly speaking they all outline the following requirements:
Technology & Expertise
The amount of in-house technology - including power and cooling – combined with the on-going human expertise and resources to provide 24 x 7 physical infrastructure management and support can represent a considerable cost. Moreover, these costs and resources might better be deployed elsewhere and contribute instead to the core revenue-generating function of the firm.
Firms running their own comms rooms must be confident that their technicians are well-informed about the latest changes in data centre technologies, which are becoming increasingly efficient and are quickly deployed in a purpose built hosting environment.
IT infrastructure and data management place a huge demand on facilities in terms of power and cooling and the costs to deliver a resilient infrastructure can be prohibitive. Access to a resilient and diverse power supply is critical to minimise any potential down-time. By design, a data centres inherently offer an uninterruptable power supply. To give a sense of what this means, our tier 3 Central London facility in Great Sutton Street offers diverse 33kV power supply of 9.6MW from not one, but two independent substations of the national grid. A large proportion of London would have to suffer an outage before we would need to invoke our back-up generators.
Diverse low-latency connectivity
Domestic and international links are important when accessing the global financial markets and firms are looking for diverse carrier feeds to ensure the fastest, most effective trading routes and data feeds. Connecting these feeds into in-house facilities can be a challenge, whereas, by nature, data centres have multiple carriers with diverse links already in place.
Experience has taught us that on the whole, suppliers are quicker to deploy and support the connections to data centres than individual sites – we put that down to the benefits of scale.
Flexibility & Scalability
It is interesting to note that many financial services firms are employing heads of data and data strategists. Heads of Technology are considering how to handle the scale and inevitable growth of data and we talk to many firms about the constraints they are facing and can anticipate. Can their comms room handle the data requirements today? Do they have the space and facilities to handle future expansion both in terms of rack space, power, cooling and internal and external connectivity?
Scaling up at the right pace can be a gamble. Empty facilities waiting to be filled cost money. Overfilled spaces run the risk of being adversely impacted by operating in sub-optimum conditions.
Security & Location
It is interesting to note that financial firms are also looking at data in different ways. What types of data should be kept on-site? What can be housed in an outsourced data centre? Regulatory and security obligations tend to underpin these discussions and we have seen a lot of interest from firms attracted by the convenience of our central London location, our security procedures and protocols, as well as the choice of connectivity and resilient power.
Time will tell
As firms are considering their data management, storage and handling strategies they are considering how to support and serve the growth at the right pace and in a way which will immunise them against having to over-invest in order to stay on top of technological developments. Whether this is a full in-housed approach, a hybrid approach with data centre support, Trade Tech will be a-buzz with debate about how the players in multi-asset class trading need to innovate and adopt technology, and core to this will be how the industry and the firms within it, approach data management.