Top Financial Technologies Women Should Know About (part 2)

Contributed by Sophie Fletcher

The financial technology landscape is evolving from a trading floor-based industry to one that relies on algorithms, electronic trading platforms and wireless handhelds. In this second installment of “Top Financial Technologies Women Should Know About,” we examine the impact of the FAST Protocol trading technology on financial markets. This computer software language is gaining recognition because of its ability to reduce traffic and speed up data flow within our network bandwidths. Women, as savvy investors and market participants, should be familiar with this technology as it becomes an industry standard in today’s capital markets as well as a solution for growing Internet capacity.
The FIX Adopted for STreaming protocol, or FAST Protocol, is a programming language developed by FIX Protocol Limited’s (FPL) Market Data Optimization Working Group. The group was formed in 2004 to find ways to optimize the transfer of FIX messages with a focus on market data. Firms like the Chicago Mercantile Exchange, the Options Price Reporting Authority and NYSE Arca funded FPL’s testing of the technology and the protocol was released in 2005.

“The studies indicated a 75-85 per cent decrease in exchange data flow,” said Yev Brailovsky, a Technical Architect at Capital Markets Consulting. “This allows the data to travel faster and lighter through the data connection.”

The protocol works by translating data into a condensed binary code that is unreadable to humans. The binary code only sends the most recent and changed data through so not to crowd the network.

“The protocol reduces traffic; however to read the FAST code you will need to implement a decoder,” said Brailovsky, who has customized various FAST translators.

Decoders are available for download at the FPL website as well as the OPRA website.

The FAST Protocol is mandatory for anyone trading options today. Not only has the language helped reduce traffic as the industry adopts penny pricing, but OPRA has also fully integrated the language into their system. Firms receiving OPRA market data are forced to also integrate the protocol.

The Chicago Mercantile Exchange, the London Stock Exchange as well as Eurex, Europe’s largest derivatives exchange, are a few of the firms that have also adopted the language.

While the protocol is enhancing the transmission of market data in the financial industry, FAST language has a broader appeal as well. With the Internet expanding at such a rapid pace, network bandwidths need to adapt to the heavier information flow. According to the New York Times, YouTube alone carries more data now than the entire Internet did in 2001. The traffic stems from the increasing amount of video clips, movies and social networking sights found on our networks. Experts believe that by 2011, most Internet users will experience delayed download and surfing responses because of an overload of information. Protocols similar to the FAST language, that can reduce network traffic, will be useful in speeding the transmission of data.

More information about the FAST Protocol is available at the FPL website as well the OPRA website.

The Glass Hammer looks to inform our readers about technical developments enhancing the way our industry conducts business. If you have a story or inquiry about a certain financial technology, please leave it below.