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Financial Firms Face Massive Market Data Infrastructure Challenges

If U.S. equities message volumes continue to grow at their current pace, they should average 1.2 billion messages per day by 2011, according to new Aite Group report.

Market data volumes are expected to continue to grow exponentially, further straining market data infrastructures, according to a new report from Aite Group.

If U.S. equities message volumes continue to grow at their current pace, they should average 1.2 billion messages per day by 2011, the Boston-based firm said.

Storing all Level 1 and Level 2 data for U.S. equities is approaching a requirement of three terabytes per month.

For all asset classes, across U.S. market data rates, data volumes nearly doubled on an annual basis over the last two years.

Still, just over half of market data professionals believe their current market data infrastructures are good enough for today's challenges, let alone the challenges of tomorrow, Aite reported.

The consultancy firm surveyed nearly a dozen market data heads at firms ranging from some of the smallest quantitative trading firms in the world to the largest buy-side and sell-side institutions. Aite also interviewed half a dozen exchanges around the world, in addition to major vendors and service providers.

Aite found that firms that employ electronic trading expect to spend over $7.8 billion on market data infrastructures in 2009.

"Due to industry-pervasive budget cuts, many firms will be expected to do more with less when it comes to market data infrastructure," Adam Honore, senior analyst at Aite Group and author of the report, said in a release.

"Firms should consider what data is actually necessary to store, and what internally managed information truly provides a competitive edge. Further, vendors should be considered carefully and realistically before selection. The biggest players may not be right for every firm's needs," he added.

Meanwhile, Honore noted in his report that many cross-asset and new market opportunities are on hold until markets improve, giving market data managers time to prepare for additional challenges.

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio

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