Banks are increasingly realising that using open source technology is cheaper and more secure than maintaining in-house systems according to Jamie Hill, OpenMAMA steering committee co-ordinator.

OpenMAMA, the Open Middleware Agnostic Messaging API, is an open source technology that allows financial firms to receive market data from a variety of vendors through a single application program interface, or API. Users do not have to maintain separate connections to each vendor which potentially lowers costs by making it easier to switch data provider or middleware without lengthy code changes as their business changes.

Hill said: “Using OpenMAMA allows financial firms to reduce the risk of being locked into a particular vendor so that technology changes are easier and cheaper to implement.”

MAMA was originally developed a decade ago as a closed source product by market data technology firms SR Labs and Wombat, which was acquired by the New York Stock Exchange and then divested by ICE. In 2011 MAMA converted to an open source technology hosted by the Linux Foundation.

Jim Zemlin, executive director of the Linux Foundation, said in a statement: “After several years of post-crisis turmoil, the financial services industry is now having to modernise its approach to technology and become more responsive to regulation. Open source initiatives like OpenMAMA, can help the finance industry do this and we look forward to seeing this collaboration continue to grow.”

Hill said MAMA is being used by most Tier 1 banks and a lot of Tier 2 banks and many are in different stages of deploying and evaluating the open technology version.

“Banks have historically not been keen on contributing to open source projects but are coming round to the view that leveraging collaborative development methodologies is less resource intensive and cheaper than maintaining an in-house proprietary system,” Hill added.

He argued that open source technology is more secure than in-house systems. “Alterations go through many stages of peer review who are more likely to spot vulnerabilities,” Hill said.

This month the OpenMAMA project launched a new advisory group of five Tier 1 investment banks, increased vendor coverage and, for the first time, launched the ability to bridge data to and from Thomson Reuters Enterprise Platform using a completely open source stack.

The project already had a steering committee to oversee development and implementation which included JP Morgan and market data technology vendors SR Labs, Tick42 and Solace Systems.

“The advisory group adds tremendous value as it provides much broader user input,” added Mill. “We are extremely proud to have JP Morgan supporting the project but to have input from multiple JP Morgans has provided solid validation of the platform.”

OpenMAMA said in a statement that there has been a recent increase in downloads of the or API by the developer community, indicating stronger interest from financial services firms in developing applications using OpenMAMA.

“We would like OpenMAMA to become the industry standard market data distribution and we are in a place where that is achievable today with bridges to Thomson Reuters and Bloomberg,” added Hill.