The future of financial markets communications will be shared networks, according to a new report from TABB Group. The industry has become dependent on high-speed connectivity to the point that, without it, there would be no markets, payment mechanisms, clearing facility or market data, the report concludes. Further, firms with proprietary networks will find sustaining their infrastructure an increasingly expensive challenge as costs and complexity continue to increase.
Buy-side firms project that by 2007, electronically routed orders will increase to 80 percent of total order flow, increasing the importance of an effective connectivity infrastructure, according to TABB Group, which notes that order volume is expected to rise from approximately 1.2 billion shares per day in 2005 to 3.1 billion shares per day in 2007. This estimate does not account for the adoption of the NYSE hybrid market.
TABB Group reports that secure, reliable, high-speed and low-latency shared connectivity will be key to future financial markets communications. "As networks consolidate and membership grows, the ability to connect, communicate and easily obtain and integrate virtually all services through a centrally hosted connectivity provider will not only increase the value proposition of financial extranets, it will make connecting in virtually any other way almost obsolete," explained Larry Tabb, coauthor of the report and TABB Group founder, in a release.
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