FINRA Reports Explosion in Market Data Volumes in 2018

A report released this Tuesday by the (FINRA), a self-regulating body in the US, indicates that 2018 saw a massive increase in the generated by financial institutions.
According to the report, FINRA collected a daily average 66.7 billion electronic records over the course of the year. Records were generated by quotes for securities, actual transactions and cancelled bids.

To give those numbers in some perspective, that means that every second in 2018, just over 771,990 pieces of recorded data were collected by the self-regulating body.
FINRA’s report indicates that the volume of data collected almost doubled last year, increasing by 83 percent when compared to 2018.
Volatility to blame
There appear to be two core reasons for this. Firstly, political instability generated by, amongst other things, Brexit and the ongoing US-China trade war, caused spikes in volatility throughout the year.
As you might expect, volatility caused more erratic shifts in prices, spikes in trading and an increase in cancelled orders. Thus, data volumes, which are records of transactions, quotes and cancelled orders, rose accordingly.
On top of this, there has been a steady increase in the electronification of markets over the past six years. For instance, in 2015 FINRA reported a peak of 2 million messages being sent every 100 milliseconds. By the middle of 2018 that number had double to 4 million.
Though more data may seem like a positive, the sheer volume of information raises questions as to how useful it can be to regulators.
Financial authorities across the globe have been rallying to collect more information from companies as they attempt to prevent any foul-play in the markets.
That is certainly a noble aim but it seems as though overreach could lead them to drown in a huge wave of data.
 

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