The data cloud shift aims to transform how firms research, trade and evaluate their strategies
It’s all about the data.
The lifeblood of trading is simply that – data – how to get it, how to decipher it and how to trade off it. The good news for traders is that it is now more accessible, flexible, and researchable than ever, especially with the rapid evolution of cloud technologies.
QuantHouse, a market data, algo development and trading infrastructure provider, is pushing hard to move its data to the cloud, a strategy that Pierre Feligioni, co-founder and CEO of QuantHouse, says will put even more power in the hands of the buy-side and sell-side firms his company serves. In his estimation, the migration of market data to the cloud means customers will be able to more easily access data, develop strategies and back-test them faster and more effectively than ever. Realtime data isn’t going away either, and tapping into data from dozens of exchanges around the globe is an equally important and valuable business for QuantHouse.
The focus, Feligioni said, is on “changing the way for my clients to consume the data.”
All signs are that QuantHouse and many other firms are moving in this direction as quickly as they can. A 2016 report from UK-based MarketsandMarkets estimated that the “finance cloud market” could grow from $9.8 billion to $29.4 billion by 2021, an estimated compound annual growth rate of 24 percent. The shift has been building steadily in the market space. For example, Barchart rolled out its Barchart OnDemand cloud-based data service in 2013. Intercontinental Exchange Group bought SuperDerivatives in 2014, in part for its cloud-based derivatives data services. And CME Group is pushing into this area as well, moving its historical data into the cloud in a service called CME DataMine.
In Q1 2018, QuantHouse plans to feature its data on the cloud from the dozens of markets it taps into. On top of that, QuantHouse is investing heavily in more analytic tools for customers to create metadata, which is simply data about other sets of data. Feligioni said, “now we see everyone coming up with new data sets, new indexes. So you need to use software to crunch the data to create that.”
Other data firms and independent software vendors are also looking at the metadata space. Firms can now take their own trading information and identify better performance strategies for traders, or weed out problems with a particular strategy. Layer in artificial intelligence and machine learning tools and you can see the potential for firms and another phase of competition.
QuantHouse moved to bolster its overall service offering with the acquisition of Victory Networks in September, giving it further reach in the high speed network space, especially for hedge funds and asset managers. Feligioni believes his firm is now well positioned for that client base which is increasingly looking for more efficient and cost effective automated strategies and operations.
Looking ahead, he said these technology trends will enable buy-side clients to find one another much more efficiently, which could diminish the role that intermediaries play.
Edited by Sarah Rudolph