Sell-Side Equity Technology Gets Smarter in 2010

Sell-side heads of equity technology are looking to consolidate their data centers into fewer locations, but not give up space, reports Kevin McPartland, senior analyst at , who posted a video on Youtube.McPartland's comments are based on Tabb Group's new study, "US Equity Technology 2010: The Sell Side Perspective." One of the major themes is the sell-side's search for efficiency - the need to do more with less. The study is based upon interviews with 24 CTOs, CIOs and heads of equity technology at U.S. sell-side firms.

Even though data rates continue to soar and latencies continue to drop, budgets are not growing as fast as demands of the business, so the sell side is looking around for ways to be smarter about where they're data centers sit, observes McParland in the video. And although green computing is in vogue, the average bulge bracket broker spends nearly $30 million annually on excess compute power, estimates Tabb Group's study.

Brokers are also looking to consolidate their utilization of servers - there are 93,000 sell-side servers running the US equities businesses. Horizontal scaling of servers doesn't work any longer because data center space is at a premium, says McPartland. Virtualization and multi-core chips are ways to run multiple applications on a single server. While the majority of respondents use virtualization, cloud computing, although a hot topic, was not used much by sell-side respondents, says McPartland. Some firms used internal clouds and others talked about using external clouds in the future for backtesting, but this is its infancy, says McPartland. That's because there are compliance concerns about putting proprietary data outside the walls of the data centers owned by the sell-side. Colocation of servers to get closer to execution venues was also a hot topic and is something the bulge bracket uses, but McPartland questions whether there's a cost benefit for smaller firms.

So, the sell side will continue to invest in infrastructure to grow capacity as the market demand for trading U.S. equities grows, but McPartland predicts it will look for smarter ways to do this and that growth will be smaller in 2010 than in the past.

Here's the full video:

Sell-side heads of equity technology are looking to consolidate their data centers into fewer locations, but not give up space, reports Kevin McPartland, senior analyst at Tabb Group in a Youtube video. 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