My video discussion with Ivy Schmerken from Wall Street and Technology on the new to big to fail:
This story gives an overview of the presentation I gave at the Accelerating Wall Street conference in May 2010. Much of the data was based off our our Sell Side Technology study from December 2009.
“Clearly the sell side loves its data centers,” McPartland told the audience. “There’s a lot of horsepower that has to sit behind these equity businesses. … It’s getting more and more complex to manage the infrastructure.”
And more costly. Equity firms spent $1.8 billion last year on data centers; half of that total came from sell-side shops, according to the TABB Group report, which predicts that the sell side’s use of data center space will increase slightly in 2010.
Good article talking about what latency really is and what to think about when trying to measure true end-to-end latency in the trading process. I think for the top end of the market the only way to reduce latency further is through hardware. My quote:
When evaluating latency, it’s vital to consider all of the contributing factors, including the trade logic (the code that runs matching engines and algorithms), the speed of calculation hardware, the speed of telecom switch hardware, the quality and number of connections, and the distance between network nodes, according to Kevin McPartland, analyst at TABB Group. The industry as a whole is rapidly approaching the point where, “The code is so tight, hardware improvements are the main thing that will increase the overall efficiency of the operation,” McPartland says.
If Aleri was having financial difficulties, Aleri’s competitors and industry observers were not aware of the fact. Mark Palmer, CEO of StreamBase Systems, a CEP provider and direct competitor to Aleri, said in an interview: “Aleri made some moves that should have put them in a good cash position. In the market, the products are well regarded and I would have guessed that they were doing pretty well.”
Kevin McPartland, senior analyst, Tabb group, also hadn’t heard of any financial difficulties. “I don’t think anyone was concerned with the health of Aleri,” he said in an interview. “The story of Coral8 and Aleri worked well.”
Discover why organizations like NYSE Euronext are using some of the latest high performance networking technology to improve throughput and reduce latency throughout the trade cycle in this webcast that also features TABB Group Senior Analyst Kevin McPartland.
So, the sell side will continue to invest in infrastructure to grow capacity as the market demand for trading U.S. equities grows, but McPartland predicts it will look for smarter ways to do this and that growth will be smaller in 2010 than in the past.