Market data rates march onward and upward

With news of bankruptcies and bailouts dominating the headlines and sizable layoffs leading to half-empty trading floors, it’s easy to think of Wall Street as being in a holding pattern—tightening its collective belt and holding on until the economy rebounds.

But don’t talk to the IT folks supporting trading about an “economic slowdown” – the global economic crisis is driving the rapid acceleration of market data rates. The April 2009 market data stats from FIF showed new record peaks for eight of the top exchange feeds, some of them up as much as 44%! That continues to put pressure on already overworked market data infrastructures.

Despite the misperception that leading capital markets firms are mired in budget cuts and freezes, these companies have no choice but to spend to stay competitive in their infrastructure. Without timely market data they are dead in the water and might as well turn the lights out.

Staff cuts and outsourcing are for real, and paychecks aren’t what they used to be, but this report (ed: no longer available online) from Aite confirms that capital markets IT budgets aren’t down as much as people think. Late last year the analyst firm Aite predicted that Wall Street IT spending wouldn’t drop more than 5% in 2009, and halfway through the year they’ve only tweaked that prediction to 6%.

This business reality is what is driving the move from software- to hardware-based messaging in earnest. Capital markets firms have been moving away from the antiquated model of building their infrastructure internally for years, but the availability of easily-deployable feed handlers and messaging appliances that outperform COTS and homegrown software by orders of magnitude is making it a competitive necessity. An investment bank building their own custom hardware would be way out of scope even for the world’s largest firms, and even in the best of times.

We’re pleased to count technology leaders like Barclays Capital among the list of financial firms that are leading this transition.