Financial firms will struggle with data overload

2 Aug 2007

Financial services institutions are under severe pressure to ensure they have appropriate infrastructures in place to handle rising volumes of market data. New regulations will require many to store data for up to five years.

Spend by European and US hedge fund and fund management firms on front-office market data infrastructure is set to reach US$484m by 2009, claims Datamonitor.

Expenditure by European and US investment banks coping with new compliance standards like the Markets in Financial Instruments Directive (MiFID), which will come into place this October, will see investment in front-office market data infrastructure peak at US$1.9bn.

“Market data has always been a fundamental element within capital and financial markets,” said Amit Shah, financial services technology analyst with Datamonitor.

“However, upcoming regulations such as Regulation National Market System and MiFID, will place immense pressure for accuracy and transparency. This has raised the significance of market data and therefore brought this issue back on to the strategic agenda.”

As the global economy has expanded, market data requirements have continued to grow. According to Datamonitor, the total European and US financial services industry front-office market data infrastructure IT spend currently stands at US$2.1bn.

The upcoming increase in market data will have profound impact on market data infrastructures: one being the need for storage; and another ensuring the firm in question has relevant analytics in place, to deal with the anticipated increase in volumes.

Forthcoming regulations state that firms need to store data for five years, and with annual storage doubling annually, pressure on the systems to accommodate the data will be immense.

Given the storage pressure on systems, Datamonitor expects IT spend on market data storage to peak in 2008.

By John Kennedy