As technology has made trading more advanced, it has also put more pressure on firms to manage and store all that data. Firms that rely on spreadsheets to do that are overwhelmed by the high volume of trading data today.
Jim Mullen, founder and CTO of Firm58, a trading and back-office provider, illustrated the problem in an interview with ThinkAdvisor.
“As trading came off the floor and went electronic, you saw what used to be a single trade of, say, 1,000 shares get broken down into 10 trades of 100 shares, or get broken down even further. In addition to that, those trades can then get placed across many marketplaces so in the last 10 to 15 years, a proliferation of new markets have come out so basically you can trade anywhere you want,” he said.
That has resulted in two new realities for firms, he said. “One is I have physically a lot more data. I have to store it and house it just like any other trade.”
The other problem is the complexity of determining fees. “I’ve added complexity to any calculations around fees and commissions because I’m involved in multiple parties. A single trade of 1,000 shares can now go to many places. Each of those places might have different fee structures in place,” he said.
As the SEC and FINRA have become more aggressive, he said, the industry has realized it can’t run compliance from a spreadsheet anymore.