If you look at our new corporate bond master service, XigniteBondMaster, you’ll quickly see that you can use it to get information for over 125,000 U.S. corporate bonds, including issuer information, maturity dates, coupon rates and so on.  But you’re not likely to see one of the best features of the service until you roll up your sleeves and start digging around in the data:  the ability to look up official CUSIP identifiers with remarkable ease.

CUSIP identifiers are highly valued throughout the industry as the de facto standard for uniquely identifying over 9.1 million financial instruments.  And now you can easily look up CUSIPs for thousands of corporate bonds using XigniteBondMaster.  Interested in a particular issue, but not sure what its CUSIP is?  Try looking it up by the bond issuer!  Or just look it up by bond name.

All CUSIP data comes from CUSIP Global Services, an organization managed by Standard & Poor’s on behalf of the American Bankers Association specifically to oversee the official set of CUSIP identifiers.

You do need to have an agreement in place with CUSIP Global Services in order to receive CUSIP data, since this is highly valued data that must be licensed first.  But once you have an agreement in place, CUSIPs will automatically start appearing in your XigniteBondMaster outputs.

Market data providers and IT professionals have tough jobs. Every day financial markets spew out huge fountains of data that must be captured, routed, scrubbed, reconciled, stored and redistributed with dizzying speed and accuracy. The diversity of data is staggering, from low-latency pricing data for algorithmic trading to intermittent corporate actions such as stock splits, and from globally dispersed real-time currency exchange rates to aggregated end-of-day VWAP and NAV calculations. Optimizing and tuning the market data systems that keep this crucial information flowing smoothly and cost effectively is no easy task. What, if anything, can cloud computing offer to ease the challenge?

This is the second post in a series called “Thinking Out Cloud” with the aim of helping financial services and market data IT professionals charged with developing cloud computing strategies separate the cloud buzz from the cloud reality. This post explores the types of market data that naturally lend themselves to cloud computing (and those that do not) in order to identify the market data sweet spot for cloud computing.

First, it’s important to recognize that it is not the market data that is being outsourced to the cloud, but the on-premise market data management infrastructure. Therefore, the market data sweet spot for cloud computing is the intersection of data management systems that offer little competitive advantage, but are costly and difficult to maintain in-house. Both relative competitive advantage and relative level of difficulty will vary from firm to firm by business focus and IT capability respectively; however, there are aspects of the market data itself that can contribute significantly to the cost and complexity of maintaining an in-house data management system.

Hard to Use Market Data

If the market data comes in original feed formats that are not well suited to the particular use of the data in the final application, then considerable effort must be expended to make the market data application-ready. For example, a real-time streaming exchange feed is great for creating a stock ticker, but not so great when the goal is to analyze historical tick data or simply get an ad-hoc real-time quote for a single symbol, then there can be lots of programming involved to parse the feed, store the data, continuously refresh the database and create a data access layer that applications can easily utilize. Cloud computing is built on Web services that allow for multiple interfaces to the market data, so it is especially good at tailoring the data format to the specific needs of the application on the fly. For example, a Web service request can be for a single price, multiple prices, or simply for symbol validation against master data.

Hard to Maintain Market Data

If the market data in question is stored and refreshed often due to daily activity, such as historical time series and tick-by-tick data, then it can entail a complex update process that must be maintained and monitored. Quality testing must be put in place to ensure data quality and alerts to ensure that update processes run successfully to completion. As market data accumulates, regular backups, purges and capacity upgrades must be carried out to ensure efficient operation. Also, market data that is particularly complex, such as corporate actions, can consume significant resources scrubbing, mapping and updating the data even if the volume is not as heavy as price data.

On the other hand, market data that is infrequently updated in large batches that replace the entire data set may be easier to receive and maintain internally as a simple flat file. Similarly, market data that is streamed for continuous presentation and immediately discarded should be relatively easy to handle in-house.

Hard to Access Market Data

Technical and geographic barriers can conspire to make certain kinds of market data extremely difficult to access, let alone store and use. Getting access to market data that is not in high demand in your geographic location can be very difficult when local data providers do not support it, such as low volume market niches and new products, or market data that is created on the other side of the world. If data needs to be made available throughout a dispersed global organization, it can be quite costly to receive it centrally and build the necessary network and services infrastructure to distribute it globally to consuming applications. Cloud computing provides direct application access to market data over the Internet, so both the geographic and technical barriers to access are significantly reduced. Web services standards ensure that the technical hurdle is very low, so as long as sufficient Internet bandwidth is available, access is no more difficult than pointing a Web browser to a Web page.

The Cloud Computing Sour Spot for Market Data

If hard to access, hard to maintain, and hard to use define the market data cloud computing sweet spot, then what is the sour spot? When boiled down to its essence, all of the “hard to’s” above are made “easy to’s” by the Internet. So, the sour spot is found when the Internet has a significant negative impact on market data delivery. The three biggest limitations, in most likely order of importance are…

Too Risky

The market data is unique and proprietary with significant competitive, security or privacy concerns that preclude storing or distributing it using a public network, even with encryption.

Too Fast

The latency requirements of the data are very strict and have a low tolerance for variation. Typically less than about 50ms on average which is about the best that can be consistently expected from a high performance Internet connection. In addition, Internet latency can vary significantly depending on the number of network hops between the cloud provider and the consuming application. This number improves every year (back in 2000 we were talking seconds). But it is safe to say that latency requirements measured in microseconds or nanoseconds won’t be a good fit for the cloud.

Too Fat

The market data volume involved implies a network transfer time that exceeds the requirements of the consuming application given the best expected performance over the Internet. This may be alleviated by getting a direct network link to the cloud provider if the cost of the additional bandwidth is justified by the overall cost savings from outsourcing the relevant data management infrastructure. In some cases, this can also be resolved by moving the application itself to the same cloud computing infrastructure. However, an in-house application that requires frequent updates with large volumes of data can quickly exceed the best performance currently available over the Internet.

Cloud computing has graduated from technical curiosity to technology trend. According to a recent Gartner survey, cloud computing and virtualization sit squarely at the top of the list of 2010 CIO priorities. However, most financial services IT professionals are still taking a cautious approach to cloud computing. This is quite understandable given the high performance, security and compliance requirements of financial applications. Unlike Twitter, you can’t just post the fail whale when a financial application has an issue, because real money is at stake not just tweets. So, what financial applications are good candidates for cloud computing and why? To cloud or not to cloud? That is the question.

This is the first post in an series entitled Thinking Out Cloud with the aim of helping financial services IT and market data professionals charged with developing cloud computing strategies separate the cloud buzz from the cloud reality.

Focus on Competitive Advantage

Realistically, somewhere between 75% and 95% of the software used by most businesses today is a commodity. That is, it offers no competitive advantage because the competition has access to the exact same capabilities from a plethora of software vendors, SaaS vendors, open-source projects and home-grown systems. This means that if your financial services IT department does everything in-house, pretty much 75%-95% of your IT department’s hard work and budgetary expense offers a competitive advantage of exactly zero. Only the 5%-25% spent on systems that help your business stand out from the competition make a real difference to top line revenue. Yet, I’ve never seen a financial services IT department that had extra time on its hands. Therefore, the first consideration in any analysis of cloud computing should be to weigh the competitive importance of the various systems under IT management, and to look for opportunities to free up resources by pushing systems that do not offer competitive advantage to the cloud.

Leverage Cloud Computing to Lower Costs

The primary financial benefit of cloud computing is lower total cost of ownership created through the economies-of-scale of shared computing resources. It makes no difference if it is infrastructure from Amzaon AWS, CRM from Salesforce.com, or market data from Xignite, the underlying common thread is that these vendors can do it significantly cheaper by the dozen than customers can do it in-house one at a time. This cost savings is then passed onto the customer in the form of an ongoing usage-based subscription. Conveniently, this prospect of lower overall costs fits nicely with the idea of outsourcing commodity systems. Therefore, the next consideration in an analysis of the benefits of cloud computing for a particular system should be the relative costs savings. It is critical at this point to compare the total cost of ownership of each internal system to a cloud vendor’s subscription pricing, not just the cost of the software and hardware. More often than not, the largest costs are hidden in the IT staff time that the systems absorb in the form of ongoing maintenance, upgrade projects, support and bug fixing, etc. Since these activities are taken on by the cloud vendor, they should be included to ensure an apples-to-apples comparison in the on-premise vs. cloud decision.

Reduce Operational Risk or at Least Stay Risk Neutral

Risk is easily the biggest barrier to cloud adoption for financial services applications. Financial risk, regulatory risk, security risk, performance risk…risk, risk, risk. The risk implications of cloud computing often appear so daunting that some financial services IT professionals would prefer to avoid the cloud entirely—which is a shame. To be sure, putting customer investment account information on the cloud is a non-starter. And, even something as simple as company email entails significant compliance risks. However, the one mistake most IT departments make when evaluating the cloud is to equate risk reduction with internal control. It is often the case that the focused expertise and scale of a cloud computing vendor provides significantly lower risk than an in-house system. This gut reaction can be compared to fear of flying: just because you’d feel safer if you were flying the plane, doesn’t mean you’d actually be safer. Therefore, it is important to evaluate the risks of cloud computing as objectively as possible. Does the vendor publish an SLA and public performance statistics? Who are its current customers and what do they say about the vendor? What are the vendor’s security and disaster recovery policies? What kind of support is available? All these questions should be asked of a cloud vendor. And, all of these questions should be asked of the comparable internal IT operation. If you’re not a pilot, you might just be better off taking a commercial flight.

Market Data: To Cloud or Not to Cloud?

There are two important aspects of market data systems to consider when evaluating the potential for moving them to the cloud. The first is to recognize that it is not the data that is being outsourced with cloud computing, but the data management infrastructure. In most cases, the data is already outsourced in the form of a traditional data feed, so the on-premise vs. cloud comparison actually centers around the internal software, hardware, databases, development and administrative IT staff required to maintain the internal data management infrastructure that shuffles the data from a feed to a final application. The second aspect is that unlike investment account data, market data is not about the company or its customers, and thereby sidesteps the number one barrier to cloud computing adoption in financial services: data security. But, it doesn’t make it a slam dunk. It is still important to carry out a full evaluation along the dimensions of competitive advantage focus, cost reduction and risk reduction. Does the data management system in question create competitive advantage or simply maintain competitive parity? Does the cloud offer significant cost reduction over the total cost of internal data management systems? And finally, does the cloud offer neutral to lower risk given the nature of the market data and the relative sophistication of the cloud vendor’s platform vis-a-vis on-premise operations.

Now that the cat’s finally out of the bag on BGCantor’s new on-demand web services, I can finally take the readers of the Xignite blog back stage for a “behind the scenes” look at the making of the biggest initiative in the on-demand financial web services world since the start of Xignite.

BGCantor On-Demand offers fixed income and derivatives data via on-demand web services using Xignite’s core platform.

What happened behind the scenes?  How did this new on-demand business get launched?  And what did it take to launch it?  Well, first and foremost, it took a great team at BGCantor Market Data.  The BGCantor team was absolutely delightful to work with.  Everyone was highly knowledgeable, very responsive, dedicated to accomplishing the mission and very excited about the whole project.  We couldn’t have asked for a better group to work with.

Together, the BGCantor/Xignite team started by designing web services to be truly application-ready, combining Xignite’s web service experience with BGCantor’s in-depth market data knowledge.  Then we coded the web services on top of the XigniteOnDemand market data distribution platform for rapid development on a robust, high-performance, highly scalable architecture.  At the same time, we also built the BGCantor On-Demand website and tightly integrated it with the web services themselves.  To help manage the new on-demand business, we also deployed an administrative portal for on-going management of customer accounts.  At the same time, on the sales and marketing front, we worked together to find just the right usage-based pricing model to drive strong revenue growth for BGCantor while also delivering exceptional value for BGCantor’s customers.  Then we collaborated on developing marketing collateral and sales tools.

As for showing you blooper videos of our behind-the-scenes footage, I’m afraid I couldn’t quite convince Legal to sign off on that. Sorry. Maybe next time.

A few years back, if you asked your IT professionals about Cloud Computing, you probably would have received a blank stare, followed up with an “I love my servers” comment. At that time, even the term “Cloud Computing” was plagued by confusion, uncertainty and a fair amount of misinformation. Early misconceptions were further reinforced by the many ‘cloud flavors’ being lumped into one term, SaaS, PaaS, utility computing, virtualized computing, managed services, resource computing, elastic computing and so on. Many concluded that Cloud Computing was more a buzzword than a definable technology.

Today, that is no longer the case, with an overwhelming consensus affirming that the winds of change are blowing in the clouds favor. The desire to move into the clouds is quickly turning into a necessity, with a wide range of internal and external forces leading the charge. Redundancy, efficiency, availability, simplicity, stability or plain & simple economics, every entity has its own unique set of reasons for moving into the clouds. With its inherent time and cost benefits, It’s no surprise that there is a growing wave of support for Cloud Computing, with some of that support coming from some unlikely places.

Recently, a once reserved Gartner highlighted the benefits of cloud computing, stating; “The technologies that CIOs are prioritizing in 2010 are technologies that can be implemented quickly and without significant upfront expense, instead of investing millions of dollars to get millions in benefits, with these technologies, up front investments are measured in thousands of dollars to get those same benefits”. In the same report, where the opinions of 1586 CIO’s were polled, it was discovered that there has been a dramatic shift in global technical priorities. Amazingly, the #1 technological priority for the past five years has all but dropped off the list, being replaced by Virtualization & Cloud Computing.

In addition to the CIO’s of the world, another area where Cloud Computing is gaining serious momentum is within the U.S. Government. It is clear that one of the world’s largest political entities is doing more than assessing the clouds viability, but rather, running down the path towards broad adoption. In a revealing interview with Information Week, Obama’s Federal CIO, Vivek Kundra stated: “The cloud computing investment in the 2010 budget reflects the administration’s desire to drive down costs, drive innovation across the federal government, [and] make sure we’re making available technologies to the workforce”.

While the executive branch of the Government is currently in the late planning to early implementation stages, other agencies within the government have already moved into the clouds. Among the front-runners are NASA’s NEBULA Cloud Computing Project, the Defense Information Systems Agencies DoD RACE Cloud, the Department of Homeland Security Cloud Strategy, and a handful of other agency-drive initiatives. One of the more exciting initiatives is the GSA’s approach to centralizing approved Cloud Computing Vendors, as well as plans for the agency to become the central clearinghouse for government backed private, public and semi-public cloud based applications and computing capabilities. To jump-start this effort, the Obama Administration, in conjunction with the GSA, launched www.APPS.gov, an all new centralized government storefront for everything cloud service related. It is apparent that cloud based technologies are becoming so prolific, even the U.S. Government is getting on-board!

While private, public and governmental initiatives are a good sign of progress in the Cloud Services segment, other sure-fire indicators include innovation and investment. In addition to the hundreds of millions invested by leading cloud service providers like Amazon, Google and others, Microsoft and HP have put their hats into the ring with a USD $250 million investment in Cloud Computing. This extended partnership is aimed at building a new cloud based ‘infrastructure-to-application’ service that will “transform the way large enterprises deliver services to their customers”, tackling both the expansion and innovation of cloud services in a single leap. According to Microsoft’s CEO, Steve Balmer; “This agreement, which spans hardware, software and services, will enable business customers to optimize performance with push-button simplicity at the lowest-possible total cost of ownership”.

Worldwide, there are countless examples of how Cloud Services are re-shaping the way we think about our computing needs, but some industries are moving slower than others towards adopting this disruptive technology. The Financial Data Industry, with its transpiring low latency arms race and troubling regulatory concerns, has all but shunned the Cloud Computing paradigm, citing a host of philosophical concerns, and boasting the perceived benefits of over-spending on data acquisition technologies.

It’s no surprise that the one Financial Data Provider that has integrated Cloud Computing technologies into its delivery model, is growing at break-neck speeds.  It’s on-demand delivery method provides professional financial market data to customers in more than 5o countries around the globe, saving serious time and money in the process. While some data vendors are holding tight to their legacy delivery methods, it’s good to know that there is at least one Financial Data Provider that can see into the clouds, and is embracing the future with open arms.

I really liked how Max Bowie characterized Xignite as “disruptive” in a piece he published in Inside Market Data earlier this week, entitled “Appetite for Disruption.” He was covering our latest release of equity options web services XigniteOptions and XigniteRealTimeOptions, but his “disruptive” moniker couldn’t be more appropriate for all of Xignite as a company.

He dubbed us as “disruptive” because our equity options services changed the economics of getting options data so much that customers like iVerit are now able to create new businesses delivering this high-volume, high-expense market data at rates affordable even to small private investors over small, affordable devices like the iPhone.

But the truth is that virtually every time we launch a new web service, we see this pattern of disruptive technology creating new opportunities to penetrate existing markets much more deeply. That’s because it’s the on-demand delivery model itself, not any particular web service, that creates the order-of-magnitude changes in economics that cause disruption and new opportunities to deepen existing markets.

So thanks to Max for giving us a rep as a high-tech company running amok causing market depth and disruption wherever we go.

With 2010 quickly approaching, we wanted to celebrate the holidays with our friends & partners in the NYC Area. Join the Xignite crew for some good food, great drinks and special holiday gifts.

Hang-out with Xignite CEO Stephane Dubois and a handful of other Xignite’rs at Stout NYC, Thursday December 17th from 5:30p to 7:30p. We will be located in the Dart Alley Area of Stout’s Cellar.

While everyone that attends will be hooked up with the latest Xignite gear (shirts, USB’s, shot glasses, etc.), the first ten people to arrive will receive a very special gift pack, worth $50 each. We look forward to enjoying great food, cold beers and a quick dart shootout with our friends & partners in NYC.

I was reminded when we launched XigniteGlobalRealTime this week of how small the world has become. There was a time when traveling from Europe to my house in California would have taken months by sea, then months by covered wagon. Now I can make the trip in a single non-stop 21-hour flight. Granted, I have to brave the kid kicking the back of my seat, screaming babies, the guy with N1H1 to my right, and the guy to my left who spends all 21 hours trying to sell me life insurance while telling me his life story. But at least I don’t have to worry about scurvy… just airline food.

The world of market data has also gotten much smaller. Not too long ago, getting intraday stock quotes from Europe’s biggest exchanges was simply out of reach for any U.S. company that didn’t have a six-figure technology budget. Now even small startup companies on a shoestring budget can get real-time Level 1 stock quotes from even the smallest European exchanges, not to mention countless other exchanges around the world. What’s next? Frequent data miles for global market data usage? (Hmmm… Not a bad idea.)

What does the Albanian Lek, Dominican Peso, Indonesian Rupiah and 140 other global currencies have in common?  They can all be found in the newly updated XigniteCurrencies section.  Redesigned from the ground up, the new currencies section has been expanded to provide the tools and information necessary to get up and running with Global Currency Data.

In addition to covering over 85% of the world’s currencies, there are several improvements that we are very excited about.  First, we have expanded the section to include two new areas, one dedicated to providing detailed product information, and the other dedicated to providing comprehensive developer resources.  We have simplified the sites navigation, while also adding cool new features including several educational videos, expanded product information and an entirely new set of interactive demo applications.  We have even created a step-by-step video on how to get up and running with a simple real-time currency converter.  If you haven’t visited the section recently, you should give it a peek.

Product Resources - Currency Overview - - What Is On-Demand - - Live Forex Demos - - Global Data Coverage -

Developer Resources - How-To Video - - Getting Started - - Forex WSDL File - - Web Service Operations -

What’s most exciting are the countless ways our global currency data can be used. Our customers have proven that it doesn’t matter if you’re an Aviation Catering Company, Armored Transportation Service, National Menswear Retail Chain, Global Automotive Manufacturer or Cool Online Gaming Startup, with XigniteCurrencies, the applications are truly endless.

Everyone has been talking about how much smaller this year’s SIFMA Technology Management Conference was when compared with previous years, fewer exhibitors and fewer attendees.  But for Xignite, this year’s show was the biggest ever. If you missed us at this year’s SIFMA TMC, we hope to see you next year. Feel free to take a look at the 2009 Xignite SIFMA TMC Photo Gallery by Clicking Here.

Despite the fact that this year’s SIFMA Show was scaled down quite a bit, we were positively overwhelmed with demand at the Xignite booth.  Our staff of seven was slammed every minute they were on the floor, answering questions, giving product demos and handing out free Xignite goodies.  Even after show hours were over, our booth stayed filled with people wanting to talk about on-demand web services.  Even when walking the halls, I overheard many others talking about Xignite, our cool new products and exciting activities that we were sharing at the show.  In retrospect, I wish we had brought a staff of twelve to handle all the demand.

Maybe it was just the Xignite shot machine and free booze we passed out. For me, it was fun demonstrating how it’s a lot easier & cheaper to get data “by the glass” (aka on-demand) rather than getting data “by the fire hose” (aka bulk files and data feeds).  If it was alcohol that brought the hordes a-knocking at our booth, that would give a whole new meaning to the phrase, “generating buzz.”

Or maybe we saw so much demand because people just couldn’t resist the power of our free t-shirts, pens, mouse pads and other freebies.  Maybe it was the awesome VIP Event that we hosted at the Forbes Galleries. Or perhaps everyone heard about us from the recent publicity surrounding Xignite, like the amazing coverage in Inside Market Data or product announcements surrounding XigniteOnDemand and XigniteCorporateActions.

In truth, I don’t think any amount of publicity, bribery or booze could have generated the amount of buzz we saw.  Having talked to many at the show, I got a strong sense that people are more serious than ever about finding game-changing technology, like on-demand web services.  Over and over again I heard people looking for way to simplify data projects, dramatically cut costs and reduce the time it takes to delivery new data initiatives to market.  In these categories, Xignite is the only show in town.