A new TABBGroup research note, “Reg NMS: Launching the Next Arms Race,” reports that brokers’ trading systems are changing at an even faster pace in response to the implementation of Reg NMS by the SEC, requiring even higher levels of routing complexity, faster execution speeds and bulging storage capacity.
“This is the first report industry-wide that examines the state of brokers in a post-Reg NMS period since its recent implementation,” says Larry Tabb, CEO and TABB Groupfounder. “It focuses on what brokers are doing and how Reg NMS will impact their future positioning.”
Beginning in 2006 and continuing into 2007, TABB Group estimates that 80% to 90% of broker spending strictly for RegNMS allocated towards low-latency connectivity, order routing and market data aggregation will exceed $80 million. For storage alone, brokers need now to store between two and five terabytes of data per day – compared to only 250 to 500 gigabytes per day in 2005 – with storage for top-of-book data primed to grow over 60% compounded annually through 2009.
“While this affects all brokers trading on the US markets, each one addresses it in a unique way that aligns best with its size, strategy, positioning and budget,” says Matthew Simon, research analyst at TABB Group and author of the note.