Towergroup: US Exchange IT Spending Is Slowing

Although many US exchanges are enjoying increased valuations after much publicized IPOs, most exchanges will spend less on technology over the next few years as they answer to shareholder pressure, work to reduce IT expenses and focus on consolidating data centers, said Dushyant Shahrawat, research director for Towergroup's Security & Capital Markets service, at the Towergroup Financial Services and Business Technology conference today in Boston."IT expenditures are remaining flat or even declining in the US," said Shahrawat. Over the next few years, exchanges will be spending IT expenditures on reducing latency, expanding capacity, improving trade matching technology, data center consolidation (after the numerous exchanges mergers) and rearchitecting market data platforms.

For technology vendors this might present a problem. Shahrawat says many vendors are planning on targeting the exchanges as a source for new business. However, the exchanges are planning on spending less than they have in the recent past, so the focus on the exchange market may be misguided.

In addition, Shahrawat expects that the exchange merger activity will slow overall. However, eventually, "the LSE will be involved in some [merger] activity," after successfully deflecting NASDAQ's takeover bid earlier this year. Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio