In the ever-evolving landscape of capital markets, the fundamental aspects of infrastructure and connectivity design play a pivotal role in shaping the performance and efficiency of the systems that support this complex ecosystem. It is crucial for financial institutions and market participants to understand how these foundational components can either facilitate or hinder their ability to address higher-layer problems and navigate the intricacies of the modern capital market.

Efficiency and Profitability

Modern data infrastructure technologies and delivery models are the key to enhanced profitability and lower costs. Efficient access to real-time and accurate market data empowers trading firms to make better-informed decisions. This translates to the more effective identification of trading opportunities and, ultimately, increased profitability.

Streamlining end-to-end transaction processing and workflows is equally essential. In a domain where speed is critical, every millisecond saved enhances efficiency. Efficient operations mean less overhead, fewer resources, and lower costs. ‘As a service’ models, emphasizing ‘pay as you go,’ present an appealing solution, reducing the overall cost of trading and associated operations.

To meet the challenges of the capital market, a modern data infrastructure is essential. Several critical components and capabilities are required:

• Robust Data Storage and Management: The ability to ingest, store, and retrieve vast volumes of trading data is paramount. In an environment where data is the lifeblood of trading, efficient management is non-negotiable.
• Advanced Data Analytics: The capacity to make sense of the data deluge is essential. Advanced analytics capabilities allow traders to derive actionable insights from the data and make informed decisions.
• Real-Time Data Streaming: Trading operates at lightning speed, and real-time data streaming is crucial for staying in sync with the markets.
• Machine Learning and Predictive Analytics: AI and machine learning technologies have become invaluable tools for predicting market trends and making data-driven decisions.
• Security and Scalability: In a realm where data is highly sensitive, the infrastructure must be secure and scalable. It needs to handle high-speed data processing, ensuring the integrity, security, and confidentiality of critical data.
• Mutability and Portability: The ability to move applications and datasets between different domains, whether they are cloud-based or terrestrial, is essential for adaptability.
• Data Sovereignty and Compliance: Compliance with regulatory requirements and data sovereignty considerations must be diligently managed to ensure adherence to industry standards.

How do these Foundations Solve Complex Business Challenges?

The fundamentals of trading tech infrastructure lay the solid foundations upon which higher-layer problems and complex business challenges can be addressed. These foundations work harmoniously to facilitate progress and innovation in the complex world of capital markets.

Efficiency at the infrastructure level significantly streamlines higher-layer problem-solving. When the infrastructure is optimized for speed and accuracy, traders and decision-makers can focus on complex business challenges without being burdened by technological roadblocks.

Furthermore, a robust data infrastructure provides the data and insights necessary to tackle multifaceted business challenges. It empowers traders with real-time information and advanced analytics, allowing them to make informed decisions.

On robust data infrastructures, Peter Williams, Chief Technology Officer at CJC, said, “There must be a holistic approach to the operational support model, not just the development and implementation of new ways of delivering and subscribing to data.” Peter adds that “we reduced client incident ticket creation by 42% year-on-year by optimising system architecture, improving efficiency and proactive monitoring with comprehensive observability.”

Challenges and Solutions – Building a Data Fabric

Building a data fabric that seamlessly integrates and moves data within and across organizations is no small feat. It comes with its unique set of challenges, but there are solutions to navigate them effectively.

• Data Standardization and Harmonization: The lack of standardized data formats, particularly in real-time market and reference data, can be a significant challenge. The solution lies in adopting and adhering to industry-recognized standards, simplifying data exchange.
• Data Governance: Strong data governance practices and quality assurance measures are essential to ensure data integrity and reliability. Compliance with regulatory requirements and data sovereignty considerations must be diligently managed to ensure adherence to industry standards.
• Hybrid and Multi-Cloud Approach: In the context of cloud environments, a hybrid cloud approach proves beneficial for trading firms. It allows them to leverage the advantages of both public and private clouds, offering flexibility, scalability, and cost-efficiency while maintaining data security and compliance. The key to this approach is seamless integration and the ability to move data within and across organizations.
• Multi-Cloud Data Distribution Model: A multi-cloud distribution model is essential to ensure low-latency data transmission, multicast capabilities, and performance management. This approach helps maintain data integrity and real-time dependency.

The fundamentals of infrastructure and connectivity design are the bedrock upon which success in capital markets is built. Inefficient design and outdated infrastructure can hinder progress, introduce delays, and increase costs, pulling trading firms away from solving higher-layer problems and complex business technical challenges. To thrive in this dynamic and competitive environment, trading firms must harness the power of modern data infrastructure and connectivity, ensuring that every millisecond is an opportunity, not a hindrance.

Authors: Richard Balmer, Senior Director Network Product Management at IPC and Peter Williams, Chief Technology Officer at CJC.