Cloud, Shared Services on the Rise
Judging by institutional-investor demand, vendors of market data see opportunity in the shift from traditional enterprise-platform models to cloud-based, shared managed services.
Another notable shift is a greater focus on actionable indications of interest, said Brennan Carley, head of Thomson Reuters’ transaction and enterprise platform businesses.
Thomson Reuters offers clients the option to upgrade versions of enterprise platforms with standard licensing agreements, or to move to a managed services model, said Carley, adding that he expects the current ratio of 90% of clients using software licensing and 10% using managed services to flip over the next five years.
Elektron is designed as an open, global, ultra-high speed and resilient network connecting market participants, enabling information sharing and trading on a single platform.
Carley, scheduled to speak on a panel at Markets Media’s Summer Trading Network event in New York on July 10, is part of an industry working group tasked with defining standardized message types and helping to establish fixed protocol to facilitate actionable indications of interest.
Data vendors are continuing to explore opportunities in high-frequency trading, which still makes up a sizable percentage of trading volume despite slow recent growth. Questions include “how much room is left in the market, how much money can still be made, or whether the game is played out,” Carley said.
“As we move to a post-quantitative easing era and get to where expected correlations will decrease,” trading-technology professionals will keep a keen eye on how that changes investment strategies, Carley said.
While relatively few traders are very sensitive to differences between low latency and ultra-low latency, market, firms that are competitive on latency but not “catering to the tip of the spear” watch how institutions are investing to gauge interest in low-latency technologies, Carley added.
A trend toward consolidation of high-frequency trading firms has technology and data vendors looking at the money trail to see where profits are squeezed and to investigate where and how people are changing trading strategies.
“Latency will remain important,” but there are fewer firms so dedicated to latency strategies that they “would sell their grandmother for a millisecond,” Carley said.