With the recent introduction of recording for voice and SMS on mobile phones for trading activities in the UK, many technologists were raising the issue of “Big Data” as additional voice recording requirements contribute to the growing repository of data being held by their firms to meet with regulator requirements. Although regulators around the globe are driving for greater visibility and a more comprehensive record of past trading activities, this additional data can also serve a purpose in other areas such as dispute resolution.
With Big Data, technologists share the concern that they appear to be facing a rapidly increasing need to hold more data. This is not only a challenge in respect of volume, but also diversity. Trading communication now takes many forms; voice, IM and SMS as well as factoring in social networks, email and other systems related data (i.e. electronic payments or transaction messaging). The expectation is that regulators will push for this broader range of data types to be held for far longer periods than before, with current averages in the range of 3-6 months moving closer to 3-5 years (as seen in Dodd Frank and MiFID II proposals). Planning ahead for storage requirements is also a challenge, as volume and diversity of data is often affected by increased activity in the markets which is hard to foresee, along with the seasonality of specific market activities. The main concern is that existing data technologies and infrastructures could soon reach their limits of scalability and performance.
So how can these data and analytics hurdles be approached? In today’s cloud based technology “as a service” world, we are seeing institutions seriously considering specialist service suppliers to provide flexible data storage solutions that are fully scalable. Although this was not a strategy that was immediately accepted for critical applications, due to uncertainty on the risks in security and reliability, the general concept of outsourcing key infrastructure (data storage) along with highly proprietary and confidential data is now gaining acceptance.
Overall, this is a situation that is still developing, where the larger the firm the quicker the issue of “Big Data” could become a reality. However, timing could be an issue here as these solutions are still relatively new and need to allay concerns, especially with the cautious and risk adverse solution teams within firms. As a trader, voice challenges around recording requirement for compliance go beyond the previous areas of expertise of the telecommunication specialists, and clearly demonstrates the impact technology convergence already has in this sector, where lines are far more blurred between technologies deployed and managed across the trade floors.