Financial Market Data Web Services – Xignite Blog

Hedge Fund Data Management – Background

Originally hedge funds were small nimble firms that were highly focused on the task of alpha generation. The industry’s out-sized returns soon attracted attention resulting in huge inflows of capital. For many managers this success also came with much greater operational complexity. Key industry developments like the change in hedge fund investor profile from high-net-worth individuals to institutional investors, the move from the single prime model to the multi-prime model, and the increase in regulation due to the 2008 crisis, have all inevitably distracted managers from their core mission of alpha generation.

The subject of hedge fund data management is particularly important because all of the above key industry developments have necessitated onerous and time-consuming reporting requirements. Hedge fund data management is also vital because market data underlies all hedge fund investment strategies. A number of trends in hedge fund data management have greatly increased the associated challenges of dealing with market data including:

1. Soaring quote and execution message rates
2. Continuing fragmentation of execution venues
3. Increasing demand for multi-asset class and global data.

Proliferation of Applications

It is important to note, that not only has there been a significant change in the quantity and type of market data demanded by hedge funds, but also the types of applications that consume this data have changed dramatically. Today, the average hedge fund environment has any number of critical applications. The traditional standard configuration of an order management system plus some type of portfolio management system and/or accounting platform, has been augmented by newer more specialized applications such as execution management systems, research management systems, risk systems etc. These applications make the job of hedge fund data management ever more complex because they all demand market data in Read more

As market data volumes continue to grow exponentially, so too does the burden on wealth managers and financial advisors to identify ways to harness the power of market data and transform it into a meaningful competitive advantage. What’s required is a cohesive market data management strategy that not only simplifies internal operations, but also lays the groundwork for tools that enhance engagement with customers.

Introducing the market data cloud

Cloud technology available today is transforming the way wealth managers and financial advisors manage market data across the enterprise and communicate with clients. Market data clouds enable firms to bypass the sizeable investments in infrastructure, hardware, software, and maintenance that are typically associated with traditional datafeeds. A cloud-based market data management solution helps firms gain economies of scale, lower costs, and increase agility.

Below are five wealth management technology challenges that are addressed by the adoption of a cloud-based data management solution. Future posts in this series will expand on each of these areas.

Wealth management technology challenge #1

Simplifying data management

The daily flood of market data shows no sign of slowing down—in fact, experts project it to accelerate in the coming years. This means that a market data solution must easily scale to meet the needs of tomorrow.

A cloud-based market data solution reduces data management frustrations. The headaches of integrating traditional datafeeds —flat file processing, data cleansing and parsing, network infrastructure, and ongoing system maintenance—disappear with cloud APIs that deliver market data directly to end-user applications.

Wealth management technology challenge #2

Developing new strategies to satisfy more sophisticated customers

In response to the recent economic downturn and substantial losses in the equity markets, wealth management clients are increasingly skeptical of the value that advisors provide. In addition, the ubiquitous availability of financial information and advanced trading capabilities has resulted in greater customer sophistication, requiring advisors to expand their reach and develop new strategies that differentiate.

The market data cloud offers advisors the ability to quickly develop new strategies with instant access to a broad range of financial information spanning equities, fixed income, commodities, options, futures, foreign exchange, mutual funds, and more.  Armed with on-demand, real time information, advisors can respond to client demands more efficiently.

Wealth management technology challenge #3

Staying connected with customers 24/7

One of the key considerations driving any data management strategy is how to leverage technology to forge stronger client relationships. Wealth management customers, particularly the new generation, expect detailed real-time market information wherever they are, whenever they want it. Advisors that deliver branded customer portals or data-rich mobile applications stay better connected with customers while enhancing transparency and trust.

A cloud-based market data solution is well equipped to meet online portal and mobile application challenges head on. Cloud-based web APIs stream real-time and referential data to mobile apps seamlessly. With a market data cloud, firms can reduce the development cycle and launch branded customer portals and mobile applications in less time. Read more

The year 2011 proved to be yet another lackluster year for the hedge fund industry. There are any number of possible explanations for why the average hedge fund lost 4.8 per cent including increased volatility, lack of focus, crowded strategies, and regulation. Whatever the precise reason for this continued poor performance, it is likely that the hedge fund industry has only a limited amount of time to get back to the glory years of consistently providing absolute returns, before it risks a significant outflow of assets under management.

The adoption of an on-demand market data cloud instantly benefits the hedge fund industry because it allows firms to address the top 5 hedge fund technology challenges.

This post is the first in a multi-part series that describes the top 5 hedge fund technology challenges all blown away by the market data cloud. In subsequent posts we will examine each of the five hedge fund technology challenges in greater detail.

Hedge Fund Technology Challenge #1

Focusing on alpha generation, not market data management

Now more than ever hedge fund managers need to be laser-focused on their core responsibility of alpha generation. Distractions such as reporting, IT management, and just the general business of running a hedge fund all play a role in reducing the hedge fund industry’s focus on the investment management process. With an on-demand market data cloud all the headaches involved with building and maintaining a market data infrastructure are removed.

Hedge Fund Technology Challenge #2

Expanding the universe of alpha generation possibilities

Hedge funds compete in a world where alpha generation opportunities have become more fleeting and dispersed than ever before. In this new world firms require a market data solution that allows them to quickly analyze a broad set of opportunities wherever they may be. The market data cloud model expands the universe of alpha generation possibilities by putting vast arrays of global and multi-asset class market data right at the fingertips of hedge fund managers.

Hedge Fund Technology Challenge #3

Bringing instant transparency to regulatory and investor reporting

The job of a hedge fund manager has become infinitely more complex with demands for improved transparency coming from seemingly every direction. For many firms this has meant onerous reporting requirements, made even more difficult by inflexible systems, and an inability to quickly access accurate market data. An on-demand market data solution, that offers comprehensive coverage of real-time, historical, and reference data, allows firms to instantly enrich their regulatory and investor reporting.

Hedge Fund Technology Challenge #4

Getting new funds up and running in record time

The health of the industry depends on relatively low barriers to entry for new hedge fund entrants, because as we know, size kills alpha. A major barrier for new funds Read more

In 2011 the cloud finally went from an unproven curiosity to an accepted mainstream technology solution. In 2012 we will witness the deepening penetration of the cloud into the consciousness of multiple industries.  The market data industry is an interesting case in point because the major industry trends are all pointing to the rapid adoption of an on-demand cloud-based market data solution.

Let’s review each of these trends individually to understand how important the cloud will be for the market data industry in 2012:

1. Market Data Supplier Economics

The suppliers of market data are in a state of flux. On one hand, the cost of business is soaring with the new technology resources required to support sky-rocketing message rates, microsecond execution, and new regulation. On the other hand, the exchanges are experiencing sluggish revenue growth. Traditionally exchanges had four distinct sources of revenue: 1.) execution; 2.) listings; 3.) clearing; and 4.) market data. Of these, only market data is growing, while the others have either completely dried up or are not likely to be a significant source of revenue in the future.  The exchanges have responded to these unfavorable economics with a wave of consolidation in an attempt to reduce costs but the health of the industry depends on growing the revenue side of the equation. The exchanges understand that their best revenue strategy is to distribute their most valuable asset, market data, direct to consumers. This strategy has already seen success with the exchanges offering direct feeds, co-location, and other services to their low-latency clients.

In 2012 we will see more exchanges begin to focus on the largely untapped segment of consumers who need market data, such as historical trade and quote data, but are not latency sensitive. This is potentially a huge revenue source for the exchanges and is ideally suited to the on-demand market data cloud. Forward-thinking exchanges such as CME DataCloud, Direct Edge EdgeBook Cloud, and NASDAQ Data-On-Demand, have already moved in this direction, but 2012 will be the year that many more exchanges embrace the market data cloud to sell directly to consumers.

(Read more about how the exchanges are embracing the cloud in our recent blog post – Cloud Strategy for Exchanges and Financial Markets.)

2. Market Data Consumer Economics

As with the suppliers of market data, consumers are also facing an uncertain future. For many consumers, particularly in the financial services industry, the whole process of data management has become overwhelming. The old model of bringing all market data in-house, so that it can be accessed quickly, is under considerable pressure. There is now simply too much data to do this cost-effectively. Another related issue is time to implementation. With intense competition, many investment firms require immediate access to global and multi-asset class market data. Unfortunately, the traditional method of having a vendor add a feed can be a very slow process. Investment firms require a much more nimble solution that allows them to quickly access discrete data sets.

In 2012 we’ll see more firms conclude that not all data should be brought in-house. This change in mindset will lead firms to become much more discerning about what data should be stored locally, and what data should be retrieved on an ad-hoc basis from a market data cloud.

3. Proliferation of Mobile Devices

It is clear that we are in the midst of a technological sea change Read more

There is little doubt that we are in the midst of a technological sea change as the world moves from an Internet that was tethered to PCs, to a world where the Internet can be accessed from anywhere, through a wide array of always-on smartphones and tablets. We’ve all heard the impressive statistics that support this trend with just over 400 million smartphones expected to be sold globally in 2011, and Gartner forecasting that the mobile web will grow to 1 billion smartphones and 320 million tablets sold in 2015.

A Consumer-Driven Revolution

To date this has been very much a consumer-driven revolution with the vast majority of Apple’s 1 billion monthly app downloads being aimed at the consumer. This, however, is beginning to change with more and more consumers demanding the convenience of mobile devices and mobile apps inside the enterprise. We are now seeing growing enterprise adoption with Apple reporting just this week that 92% of Fortune 500 companies are either testing or deploying the iPad. This is an astounding number especially since the iPad product itself did not exist 2 years ago. Closer to home, according to Good Technology, a firm that manages mobile devices for large companies, financial services firms accounted for almost half of all new iPad activations in the second quarter of 2011.

So as this mobile app revolution inexorably makes its way to the buy-side there are a number of questions to be answered:  How will buy-side mobile apps affect the technology landscape? How will buy-side mobile apps change the way people do their jobs? How will buy-side mobile apps allow firms to better serve their clients?

Monolithic Management Systems Meet Buy-Side Mobile Apps

Today, when we look at the applications used by the buy-side we can see that it is still dominated by the same trading, order management, and portfolio management systems, that have been around for the last 20 years. It could be argued that not much has changed. Buy-side employees are still spending most of their day working with these large monolithic management systems. Of course, there have been advances particularly in the areas of Read more

Every two years, SIIA/FISD hosts the premier gathering of Market Data Executives & Professionals. Alternating between Europe and the US, this years World Financial Information Conference will be hosted in beautiful San Francisco, October 9 through 12th.

We are happy to announce the 2011 WFIC Pre-Conference Reception, sponsored by Xignite. Hosted at one of San Franciscos most prestigious Wine Clubs, Press Club SF, this event will feature wines from award winning vineyards in Napa, Sonoma, Santa Cruz and Russian River areas.

This complimentary event is open to all FISD Members, WFIC Attendees and a select Xignite Partners, Customers and Friends. Click THIS LINK to view the VIP invite for this event, or click the image below to request participation.

Additionally, if you have yet to register for the 2011 WFIC Conference, now is a great time to do so. Visit THIS PAGE and enter promo code “PRMWFSP” for a special $250 Xignite discount.

Like many of us, you may have run into challenges when importing real-time market data in Excel, Visual Studio & SQL Server. With the recent addition of Xignite Financial Market Data to the Microsoft Azure Marketplace Datamarket, users can now pull live stock quotes directly into Microsoft Excel 2010, develop data rich applications using Visual Studio 2010 and seamlessly populate backend database with SQL Server 2010.

In late 2010, Xignite and Microsoft teamed up to make XigniteBATSLastSale, a real-time stock quote data service, available through the Azure Marketplace Datamarket, with the addition of other datasets scheduled to rollout in the months ahead. With this, Microsoft users can obtain instant online access to real-time stock quotes from the BATS Exchange. Now everyone from hardcore mobile app developers to garage based startups can obtain access to the same professional grade APIs to power their applications.

New to Xignite is the addition of OData, or Open Data Protocol, a method of querying and updating data which unlocks the data from the silos that exist in legacy applications. Today, OData is being used to expose and access information from a variety of sources including, but not limited to, relational databases, file systems, content management systems and traditional Web sites.

Wes Yanaga with Microsoft’s Channel 9 sat down with Shoshanna Budzianowski (SQL Azure) and Chas Cooper (Xignite) to get the low down on what this partnership is all about, and how it will benefit end user around the globe.

After the Channel 9 video was completed, Shoshanna Budzianowski sat down with Marc Bollinger, Web Service Engineer at Xignite, for some one-on-one developer talk and a bit of programming fun (CLICK MORE to see developer video)

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