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Leading a growing trend among investment banks, Bear Stearns brings in direct exchange feeds for its quantitative trading platform.

To build out a global quantitative equity trading platform two years ago, Bear Stearns knew it needed a low-latency market data platform that could pump data through its algorithms in fractions of a second. "This is really an arms race," says Jerome Downey, senior managing director in Bear Stearns' Equities and Systematic Trading (E.A.S.T.) division in New York, which houses the algorithmic trading systems it offers to institutional clients.

After benchmarking four market data platforms that support ticker plant software, Bear Stearns E.A.S.T. signed a global licensing deal with New York-based Wombat Financial Software. In January 2005, the sell-side firm went live with the Wombat platform, which provides feed handlers for direct feeds from exchanges and ECNs for equities, futures, options and foreign exchange. "They were very thorough in their benchmarking and testing," says Wombat COO Danny Moore, who notes that latency, stability, data content and market coverage are among the key variables that firms weigh in their evaluations.

"It was actually one of the easier decisions we had to make," recalls Bear Stearns' Downey. During the evaluation, the brokerage firm looked at the overall cost of the product and the overall message latencies, he explains.

Though Downey declines to name the other contenders, according to Wombat, other players vying for a piece of the direct-feed distribution space include Reuters, Infodyne, HyperFeed Technologies and ACTIV Financial Systems. "Overall, we found Wombat's latency to be over half of what we experienced with the best of the other vendors," asserts Downey. He adds that now that the U.S. rollout is nearing completion, Bear Stearns is expanding the implementation to include connectivity that Wombat offers to European markets and is helping Wombat assemble connectivity to Asian markets as well.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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