What are the challenges of managing trading infrastructure?

Effective trading infrastructure requires significant investment. As traders enter the market, become successful, and diversify their portfolios, their market data needs can place excessive network capacity pressures on their infrastructure. Traders need reliable connectivity and market data feeds to drive their trading. Many firms choose to work with a managed services provider as this is typically more efficient and effective than going it alone, as an outsourced route can enhance agility and help reduce overall total cost of ownership (TCO). 

If your organisation is going down this route, you need to work with a specialist that can build shared networks and colocation footprints, offering access to market data and trading connectivity on demand. By using these shared infrastructure services, traders can get the benefits of expertise and technology, at a fraction of the cost of doing it for themselves. It is also critical to work with a provider who can offer scalable solutions to accommodate the demands of ever-expanding bandwidth, including access to, and distribution of, vast amounts of raw market data.

As an example, Broadridge Financial Solutions (NYSE:BR), recently announced the integration of its global Futures and Options (F&O) Software-as-a-Service (SaaS) Platform with TNS. This will enhance the functionality of Broadridge's F&O platform for the derivatives market by providing global exchange connectivity for order routing and market data access with TNS serving as the vendor of record. Clients benefit from simplified market data management, reduced operational risk and implementation costs, and improved time to market for futures commission merchants.

When microseconds matter, systematic trading requires access to the fastest infrastructure and environments closest to where the trade is physically taking place within a specific data centre. Processing close to the source of the input data provides the lowest possible latency between input and response - and speed matters. Successful systematic traders use advanced data analytics to inform trading decisions through price formation, trading signals and liquidity insights, whilst leveraging the latest technology developments to gain a performance edge in their execution strategies. Algorithmic trading provides enhanced insight and complex quantitative trading strategies that improve trading efficiency and enhance execution capabilities by reducing market impact.

TNS is the only Infrastructure-as-a-Service (IaaS) provider to combine a vendor-neutral approach to market data application management, alongside end-to-end hosting, market data and consulting services specifically for the financial markets industry. Having acquired West Highland Support Services in 2023, we can integrate and manage market data distribution platforms for clients enabling firms to reduce market data expenditures while enhancing system performance and guarding against latency related trading losses. This combines connectivity, monitoring and consulting to traders and financial services vendors worldwide into one stack. 

Another key consideration for financial firms is cloud computing adoption. Traditional financial trading firms, from exchanges and data vendors, to brokers, hedge funds, and even proprietary trading firms, are now embracing cloud computing. Cloud remains the go-to for FinTech start-ups, driving innovation in financial markets. The cost benefits of the cloud for low latency trading and execution are clear - it can significantly reduce upfront costs of setting up infrastructure. The lower costs of scalable ‘pay-as-you-go’ models allow smaller organisations to leverage robust security and infrastructural elements, established by powerful hosting providers, while themselves remaining agile. 

Firms need a clear strategy for cloud implementation. Public clouds can be cost effective to put data in and keep it there, however, taking data out is expensive. Public cloud environments are great for big data analysis and help financial firms store, move, and manage large amounts of data. It is also good for transferring large volumes of data between regions, like London and New York. 

Cost savings and economies of scale can often be difficult to achieve going it alone. We have expanded our capability to help clients to reduce cost and complexity across every element of trading infrastructure spend and support, which with West Highland now includes market data middleware, application, and commercial management. With infrastructure and cloud expertise, we offer clients a single-point-of-contact coverage for all trading and market data infrastructure needs globally.