Firms are locked in a technological arms race to ward off data latency but the operational risks are more complex
LONDON – Trading data volumes and speeds have increased exponentially. Firms are now engaged in a technical arms race to head off growing competitive costs of latency. This is according to delegates at an industry and regulator forum hosted by European technology think tank JWG-IT this week.
Leading threats include data storage and retrieval speeds, application and rule processing speeds, data connectivity and interoperability, the reduction of geographical and time differences, and failings in resilience and robustness.
Speakers highlighted the dangers of an industry bias towards using big hardware brands without financial services firms paying sufficient attention to picking the right vehicles. The majority of firms still lack metrics for achieving their policies and many also lack coherent policies for data. This is linked to wider risks from data ownership, management awareness and silo fragmentation of data within firms.
Compliance issues may also arise from poor data co-ordination between departments. For example, failures in reference data management arising from a split between a firm’s client and accounts department (the buy side), and its products and instruments arm on the other (the sell side) are a continuing concern. This is fuelled by separate departmental skill sets and may damage banks’ efforts at Basel II compliance.
More on Risk Management
In this paper, we clarify the relationships among popular methods for pricing European options based on the Fourier expansion of the payoff function (iFT method) and the simlified trapezoid rule.We suggest...
We develop efficient fast Fourier transform algorithms for pricing and hedging discretely sampled variance products and volatility derivatives under additive processes (time-inhomogeneous Lévy processes)....
Observing prices of European put and call options, we calibrate exponential Lévy models nonparametrically. We discuss the efficient implementation of the spectral estimation procedures for Lévy models...
Sign up for Risk.net email alerts
Sponsored webinar: IBM
Watch highlights of this year's London conference
Operational risk and the challenges of defining and dealing with conduct risk
Watch discussions and speakers from our North America conference
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.