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The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

The Conservative and Liberal Message: Taxes and Data Rates to Rise in 2013

There are some great certainties in life, such as taxes, death and so on. But death rates and taxes can go up and down. Not so with market data. There is no argument. Data rates always go up.

Although 2012 was a notoriously poor year in terms of US trading volumes, aggregate market data traffic rose at an annual rate of 16%, according to FIF statistics. Indeed, even as the politicians gather to argue on Capitol Hill about the US debt ceiling, the key utilities governing the distribution of US equities and options data have already approved significant increases by the end of this January.

SIAC’s CQS feed carries top-of-book quotes from US stock exchanges.  It is increasing its output ceiling to 2,500,000 messages per second. The highest output rate seen on this feed stands at 580,870 mps. In other words, SIAC has provisioned headroom over four times the highest surge ever seen. Nasdaq has also been quite conservative by providing for an increase in headroom, from 300,000 to 400,000 messages per second on UQDF. This quote feed peaked at 209,975 mps in September 2012. Meanwhile, OPRA is set to increase the ceiling on the US equity options feed to 12,929,000 messages per second on January 8. Notably, the highest output ever seen on this feed was 4,999,610 messages per second when the US election results came in.

The conservatism of the utilities is no doubt driven by the business plans of the multitudinous exchanges, and this is why we are seeing much higher ceilings in 2013. As a result, there is real potential for massive simultaneous output that could be extremely damaging for those who are not prepared, assuming the markets pick up steam.

Conservative data recipients are therefore well advised to provision liberal quantities of bandwidth and system resource to allow for the next potential super storm. There is no excuse for under provisioning.

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