Tech Panel: Act ‘Appropriate,' But Speed Still Needs Spend

"You can get a long way now by buying standard products, whereas in the past you needed to do a lot of customization. You can still get benefits from that customization, but the top end [of off-the-shelf products] is higher now," said Richard Croucher, European lead of high-frequency engineering at Barclays. "You can get a long way by buying solutions off the shelf. You can buy your way into the top 10. But if you want to be in the top three, you probably have to build things yourself."

Daniel Cooke, infrastructure service lead in UBS' group technology division, said that every project must aim to be fit for a specific purpose, rather than aiming too high. "We have to be less dogmatic about how ‘Our trading system has to be the best of the best,' and look at the liquidity in each market.... For example, if you're looking at the credit markets, you would probably want a more commoditized solution. So we talk to departments to determine whether they understand the rates and requirements," Cooke said.

Similarly, panelists urged attendees to assess how appropriate specific business areas are for adopting new technologies, such as virtualization. "As an industry, we are getting much better about things like virtualization, which started out as general-purpose computing─which is not what our industry is," said Francis Madden, executive director at CIBC. "Before, virtualization was a no-no. Now, we are being more sensible, and looking at what applications and parts of the stack may be more appropriate to use it," added Barclays' Croucher.

Panelists cited the emerging use of microwave technologies for low-latency data distribution, which are becoming a "must-have" for some areas, despite their high cost, limited bandwidth and being subject to weather interference. "On the one hand, it is just another transport mechanism, but on the other hand... if you don't get it, you might miss out completely because there is such limited supply," said Jogi Narain, chief technology officer of FGS Capital, who moderated the discussion.

But for those areas that are performance-sensitive, technology can make or break a trading opportunity. "How aggressive the business is in pricing may depend on their confidence that they won't saturate your messaging backbone... and that depends on your ability to leverage tools to demonstrate its consistency and reliability through the stack," Croucher said, adding that he has seem firms withdraw from markets where they are unable to obtain sufficiently high-performance connectivity.