Data flow a growing problem for derivatives market

demand+from+messages+alone+have+grown+dramatically+in+the+past+decade 3497 800574053 0 0 14003951 300 Data flow a growing problem for derivatives marketThe Financial Times reports that the recent difficulties faced by derivatives exchanges illustrates the growing problem of dramatically expanding data flow in the finance sector.

The New York Stock Exchange saw a 90-minute outage on Thursday last week, as markets reacted to the U.S. debt deal and the country’s new negative credit outlook. The Financial Times reported that the exchange explained that the outage was due to high demand on its messaging system, one of the often overlooked aspects of the rapidly growing derivatives sector.

The Times cites numbers from Nanex suggesting the day after the outage set records for this digital stream with more than 130 million trades comprising more than 950 gigabytes of data. The average rate of messages last year ranged around 1.5 million per second, but that number reached as high as 5.3 million messages per second last week.

The problem has been exacerbated by high-frequency trading and increasing reliance on electronic platforms, as one head of electronic trading explained the growth of base data flow requires a proportional increase in maximum capacity.

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