Don’t Be Embarrassed by Shrinkage (in your Market Data)

The financial industry has a love-hate relationship with market data. It’s the lifeblood of their industry, but trading firms view dealing with it like grocery stores view constantly swapping the price tags on shelves – the cost is pure overhead and it doesn’t differentiate them from the competition. It has to be done and done well, but they want it done as cheaply as possible.

For decades, trading firms had two choices: get market data directly from tens to hundreds of constantly changing sources and figure out how to distribute it where it’s needed, or get it from consolidators that had them by the watermelons (to extend the grocery metaphor) in terms of cost and ability to switch vendors.

OpenMAMA is an open source initiative that addresses this problem by unbundling market data from its delivery. OpenMAMA does the dirty work of consolidating direct feeds and abstracts the delivery layer so you can consume it however you like. Openness is obviously a premium design feature these days, so OpenMAMA is quickly catching on as an economical, flexible and future proof way to consume market data.

Today, SR Labs (update: since rebranded as Vela and now part of Exegy), one of the leading members of the OpenMAMA working group, announced a new version of their popular OpenMAMA-based SuperFeed product that makes open format market data faster and cheaper to consume.  Their new SuperFeed Compressed Data Feed, which uses Solace appliances under the covers, can deliver low latency market data while consuming much less bandwidth.

Who cares about bandwidth utilization? The person who writes the check to pay for market data, that’s who. Often market data is distributed around the world, and most banks set up WAN links dedicated to carrying it. WAN throughput is priced by bandwidth and the more you use, the more you pay. Shrinking the data by 80% over that link cuts the cost of that bandwidth to 20 cents on the dollar. That’s huge when you consider the sheer volume of market data that gets distributed. It just keeps coming, like the walking dead, or the tax man.

Finally a scenario where shrinkage isn’t something to be embarrassed about – instead it saves you serious cash!