Robust Low Latency Messaging “Critical” to Post-Financial Reform Swaps Market Says TABB Group
News Facts:
• Informatica Corporation (NASDAQ: INFA), the world’s number one independent provider of data integration software, today announced the availability of a major new study on the technological impact of financial regulation reforms on the OTC derivatives (or swaps) market, entitled “Technology and Reform: Data, Derivatives and Decision Making.”
• Conducted by the TABB Group and sponsored by Informatica, the study details how swaps market participants will have to radically re-architect their IT infrastructures and highlights why having a high-performance messaging architecture will be “critical in making this new market work.”
• The net effect of regulatory mandates such as the Dodd-Frank Act (DFA) in the United States and European Market Infrastructure Regulation (EMIR) on OTC derivatives trading will be the creation of automated environments where electronic events must rapidly take place across electronic trading, central clearing, reporting and risk management processes – thus fixing the spotlight firmly on messaging systems and their robustness.
• According to the TABB Group, “Without an upgrade from the makeshift inter-platform communications methods that most market participants use now to a high-speed, high-capacity, reliable messaging backbone, the newly proposed market structure of execution venues, clearinghouses and real-time reporting will quickly fall apart.”
New Technology Requirements for Swaps Market Messaging
• The TABB Group’s study identifies important messaging technology requirements to enable trade automation, data distribution and analysis and reporting for swaps markets:
◦ High performance – Reform will result in an explosion in data volumes and trades and increased data complexity, and will thus require high-throughput, low-latency messaging. According to the study, “now that financial law is requesting that things happen ‘as soon as technologically possible,’ latency can no longer be ignored.”
◦ Reliability – A reliable messaging environment is imperative as the cost of losing a message in the swaps market can be staggering. Says the study, “a lost message containing an average equity trade worth just under a half million dollars represents far less risk than the average-sized interest rate swap trade of $129 million.”
◦ End-to-end messaging – Supporting the end-to-end trading process, as mandated by reform, requires messaging technology that can operate in different modes including data distribution, storage and routing.
How Informatica Ultra Messaging Helps
• Informatica Ultra Messaging is the industry’s low latency, highest performance and most efficient messaging solution, proven to meet key requirements to support the swap market’s transition to an automated environment including:
◦ Unparalleled performance in speed and throughput is achieved by removing unnecessary software brokers and daemons from the message flow.
◦ High availability and guaranteed message delivery is ensured through hot-hot zero latency failover configurations and Ultra Messaging’s innovative Parallel Persistence technology (guaranteed messaging without the latency and throughput limitations of store and forward designs).
◦ Multiple messaging modes are supported with support for all messaging semantics and ability to leverage the most appropriate transport protocol for the business.
• According to the TABB Group, “It took the equities market 20 years to go from nearly all voice to all electronic, and now the swaps markets are going to try to do the same in a tenth of the time by using lessons learned from other markets.”
• Informatica Ultra Messaging is relied on by leading organizations across today’s capital markets, helping to decrease messaging latency, improve throughput by orders of magnitude, and achieve the highest levels of messaging uptime.
Tweet this: New Research Reveals Keys to Overcoming OTC Derivatives Market Data Challenges http://bit.ly/oK1fZ9 #ultramessaging
Supporting Quotes:
• “As the TABB Group’s study concluded/determined, readying technology platforms for financial regulation reform is more than just an exercise in compliance – it’s a matter of survival for organizations that want to remain competitive in the OTC derivatives market,” said Mark Mahowald, general manager, Ultra Messaging, Informatica. “Organizations relying on Informatica Ultra Messaging have a competitive advantage not just in efficiency and reliability, but also in the business agility they gain from having a robust, flexible and extensible state-of-the-art messaging backbone.”
Additional Links:
• Informatica Ultra Messaging
• Informatica Executive Brief: Informatica Ultra Messaging Software Supports Swaps Market Automation
