Wall Street Letter VOL. XLV, NO. 36 - December 2013 | Page 14

NEWS

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Gaining Momentum in Capital Markets?”, is the result of a survey of firms
on the buyside and sellside intending
to gain insight into the perception of
the technology from potential target
users. The technology has been around
for a number of years but adoption
took hold within other commercial
industries a lot more quickly than in
financial services, according to Louis
Lovas, director of solutions at OneMarketData, who spoke to WSL.
While many respondents (72.7%)
indicated they are not currently using
the technology in support of trading
activity, more respondents (77.72%)
said they expect to increase their use
and the overwhelming reason is to cut
costs.
But Lovas said the cost savings
available via cloud are limited for
uses like data storage, which is what
78.3% of survey respondents said they
consider the most appropriate use of
the technology. “I did a bit of analysis
comparing sort of an average cost
model of data centers to public cloud

and it’s not all it’s cracked up to be,”
he said.
For public cloud services to store 24
terabytes per year, the cost increases
exponentially once a user hits the third
year, according to the report. Data
center costs increase, but at a steadier
and less steep incline. For lower
volume needs, public cloud can still be
cost effective, the report indicates.
Future adoption is expected to be
a mix of private and public offerings
across the board, the report indicates,
with just 19.6% of respondents saying
they are considering only private cloud
options and 26.1% indicating they
want to use public cloud services.
FIA EXPO 2013

Futures participants
caution on order-totrade ratios
Some futures industry participants
cautioned exchanges implementing

EXCHANGES & ATSs

CBOE to lay out funds for system enhancements

C

BOE Holdings plans to allocate more
money in the coming year for enhancements to it systems following a glitch
in April that delayed its opening, according
to comments from executives on its Q3
earnings call.
“For 2014, the preliminary indications are that we will increase our capital
expenditures next year as compared to this
year, as we look for ways to further harden
our systems,” according to comments from
Alan Dean, chief financial officer, during
the call.
Dean said he couldn’t provide details on
how much money the exchange operator will allocate but said the company is
focused on improving performance and
reliability.
Ed Provost, president and chief operating officer, told analysts that, in addition

to participating in market wide discussion
about reducing technology issues in the
national market systems, it has focused on
its internal processes.
“We have this year, following our issues
back in April, been focused on reviewing procedures for software development
testing and hardware configuration and
procedures for rolling over to our disaster
reco very [site] if necessary,” he explained.
Dean also responded to questions about
increasing the exchange operator’s revenue
per contract, which he noted declined due
in part to market share increases.
While acknowledging there may be
ways to increase RPC, he emphasized the
exchange will only go so far. “We will look
for opportunities, but won’t do anything
we think will alienate our customers or
endanger our business.”

order-to-trade ratios to set the guidelines carefully to limit the possibility
of adding risk to the system, according to comments during a panel at
the Futures Industry Association’s
29th Annual Futures & Options Expo
in Chicago.
The policies have been under
consideration across asset classes
in a move to limit the number
of unnecessary trading messages
exchanged across a trading day due
to what are considered excessive
cancellations.
Chris Zuehlke, director of OMS
risk management at DRW Holdings,
told attendees exchanges should
steer clear of penalties simply for
cancelling a trade, especially orders
that are already resting in the order
book. He noted complying with
those types of guidelines could result
in increased risk to market makers,
as an example.
Additionally, he said exchanges
should ensure the policies don’t penalize firms for cancelling trades that
are marketable if the market moves
out of favor.
“That shouldn’t work against
them if it doesn’t trade because the
markets moves against them. On the
opposite side, it should deter bad
liquidity,” he said, using an example
of an order that is priced hundreds
of ticks off of the current market. “I
think that’s a good way to balance
making sure liquidity stays while
avoiding unnecessary messaging.”
Bryan Durkin, chief operating officer at the CME Group, told attendees the exchange operator’s orderto-trade ratio policy “aggressive” and
“proactive” and noted the change
has had the intended results.
“We have reduced messaging
overall in the system and have a
consequent increase in volumes of
transactions as a result of it,” he said.
Durkin noted the ratios are recalibrated quarterly but that the group
monitoring the ratios may make
changes more frequently based on
market dynamics.