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Financial Services Institutions Turn to Technology to Cope with Upcoming Surge in Market Data

Financial services institutions (FSIs) are under much pressure to ensure they have appropriate infrastructures in place to handle throughput of rising market data volumes. This is according to a new report by independent market analyst Datamonitor, "The Growing Significance of Market Data within Financial Markets." The report investigates the technologies being demanded by the financial markets industry and the strategies they are / will begin to employ to cope with new market developments and reveals market data volumes in this space are doubling annually. Spending by European and US hedge fund and fund management firms (buy side firms) on front office market data infrastructure is set to reach US$484 million by 2009. Investment banks (sell side firms) spending will peak at US$1.9 billion. The report points out that with Reg NMS and MiFID to be fully enacted in October and November 2007, even more data will need to be processed to be compliant.

"Market data has always been a fundamental element within capital and financial markets", say Amit Shah, financial services technology analyst with Datamonitor and author of the study. "However, upcoming regulations such as Regulation National Market System (Reg NMS) and Markets in Financial Instruments Directive (MiFID), will place immense pressures for accuracy and transparency. This has raised the significance of market data and therefore brought this issue back on the strategic agenda."

The upcoming increase in market data will have profound impacts on market data infrastructures. One impact being, the need for storage and another, ensuring the firm in question has relevant analytics in place, to deal with the anticipated increase in volumes. Forthcoming regulations state that firms need to store data for five years and with annual storage doubling annually, pressure on the systems to accommodate the data will be immense. Given the storage pressure on systems, Datamonitor expects IT spend on market data storage to peak in 2008.


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