The 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.

Derivatives risk management involves a huge amount of a data and intensive computing requirements. ComputerWeekly.com reports that JP Morgan's Equity Derivatives Group has decided to take an increasingly popular approach to handling these steep demands, switching some of its risk management software over to graphics processing unit-based platforms.

GPUs differ from traditional central processing units in that they were designed initially to render images, but companies have found them ideally suited to handling some of the tasks involved in risk management calculations. NVIDIA claims that integrating GPUs into JP Morgan's existing risk management systems has increased the pace of calculations 40-fold, with only one-fifth of the cost of adding CPUs.

The addition comes as part of JP Morgan's plan to cut computational costs for risk management by three-quarters, but derivatives traders have found the added advantage that many calculations that would previously have run overnight are now complete within minutes, leading the company to average around 70 percent utilization of the new systems non-stop.

Forbes' Tom Groenfeldt notes that the development of new frameworks for using GPUs and greater familiarity with GPU programming among recent college graduates has made this technology increasingly accessible to the financial industry.

Foreign exchange contracts account for a major portion of the derivatives market, but to this point this field has been dominated by Western markets. Risk magazine reports that Asian forex derivatives have seen a precipitous rise and could be undergoing a transformation as the sector adapts to upcoming regulatory shifts.

The Bank of International Settlements released its Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity at the end of last year. One of the highlights of the report was the dramatic rise in daily forex turnover in the Asia-Pacific region. Overall, it reached $1.2 trillion with $740 billion in various types of forwards, making it the second most active region in the world.

Though no region specific information was provided on the use of electronic platforms, James Kow of Barclays Capital explained that expanding these systems into the Asian markets has taken a prominent role over the past two years.

"We stream seven Asian NDF currency pairs on Redi Trader and we see the market moving towards more electronic delivery," Myles Bullock at Goldman Sachs in Hong Kong told Risk.

Asian exchanges are also looking to encourage the forex market, such as the Singapore Exchange, which announced new clearing services for the sector in June.

The regulatory framework for the derivatives market has already changed substantially since the financial crisis in 2008, but reforms continue to take shape around the world. The Federal Reserve Bank of Chicago has introduced a new computer program to help countries calculate the costs of proposed regulations, according to Nasdaq.com.

The new program, designed for use by central banks and regulators, makes use of a wide range of data on domestic and international financial markets. The algorithms it uses will help these institutions calculate the capital requirements their new laws could hold banks against. The ultimate impact increased margins might have on economic growth or liquidity remain more complex issues.

"This tool is designed for national authorities and central banks to model the mathematical implications of whatever financial reforms they're considering," John McPartland, a senior policy advisor at the Chicago Fed, told the news source.

The ultimate shape of policies remains to be determined for most of the world, but increased collateral requirements are essentially a certainty. The G20 meeting that eventually spurred the current drive toward regulation specifically stipulated the broad use of central clearing in the derivatives market as a goal of any reforms.

Cloud computing has swept through the business world during the past years, and now the trend has made its way to one of the major exchanges. The Financial Times reports that the New York Stock Exchange announced plans to launch its own cloud-based information service.

NYSE already has a heavy investment in its own data centers, with 170,000 square feet split between facilities outside of London and New York City. However, NYSE Technology, the exchange's IT branch, has no intention of replacing these data centers with a public cloud service.

Instead, the new Capital Markets Community Platforms will move some of the less time-critical operations onto the cloud. The Secure Financial Transaction Infrastructure of the platform will allow access to vast amounts of data for testing algorithms and other analytics. Tasks like regulatory filings and statement processing will also be moved off NYSE's servers.

Pico Quantitative Trading CEO Jarrod Yuster explained to The Register that one of the greatest impacts of this new service could be the removal of entry barriers to the trading analytics industry. As limits on speculative investments by banks are installed, this could allow some of the top talent in the industry to start up new firms without needing to pull together much capital.