Tabb Group Says Financial Markets are Pushing the Envelope in a Report Redefining Real-time Transact

Tuesday 2 March 2004 20:01 CET | News

According to The Tabb Group in its new industry report, what Tom Cruise in the 1986 movie, Top Gun, said about hurtling through space at Mach 2, "I feel the need, the need for speed," is just as applicable to todays financial markets hurtling through a typical market open at 10,000 quotes per second. From its introduction, "Whats Driving Real Time?" to its conclusion, the new report, titled, "Pushing the Envelope: Redefining Real-time Transaction Processing in Financial Market", deals with the impact increasing transaction and data speeds are having on the industry. Specifically, financial engineering, FIX connectivity, algorithmic trading and black box models are dramatically changing the way that sophisticated traders and market participants are forced to address the markets, as lower costs and higher compute and networking speeds are enabling the creation of automated model-based trading. Subjects highlighted in the report include: -- Decimalization: "This has driven the automation of a majority of trades executed on both listed and OTC markets, thus becoming probably the greatest driver of real-time transaction processing." -- Real-time market data: "The Tabb Group estimates that algorithmic trading strategies comprise 6% of current order flow. As we approach 60% and 70%, tick count could increase seven to 10 fold." -- Hedge funds: "RTTPs driving short-term trading strategies as convergence of asset classes enables converged trading of heterogeneous products to take advantage of pricing disparities between related but previously unlinked products." -- Risk management: "Since many hedge funds and institutional investors are leveraging the brokers execution infrastructure, the broker will be held liable for problems stemming from their clients excesses...leading to reinvestment in firms risk management infrastructure." -- Resilience: "Post 9/11, the Federal Reserve, the OCC and the SEC and exchanges are applying pressure on firms to increase their technology resilience in case of emergency or national disaster." -- Technology: "With blazing fast sub-US$1,000, 3-gigahertz desktops, the processing speed of technology continues to expand exponentially while their cost continues to decline." The report also addresses the real-time value chain in financial markets, the rise of algorithmic and black box trading execution and how they altered market data dynamics, how hedge funds push RTTP, the increased importance of a robust, real-time risk management infrastructure and ensuring robustness across the enterprise. It also addresses, and provides industry forecasts, on RTTPs impact on the business, technology infrastructures and operations.

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Categories: Payments & Commerce | Payments General
Countries: World
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Payments & Commerce