The phrase ‘Big Data’ is the rising star of industry buzzwords, but what exactly does it mean? In this article we’ll aim to define big data and potentially more importantly, discuss the implications of big data on the hedge fund market.
Wikipedia defines big data as a “collection of data sets so large and complex that it becomes awkward to work with using on-hand database management tools.” As a result, the top software companies (i.e Oracle, Microsoft, HP) as well as financial application vendors are investing heavily in building systems to help companies harness the power of big data.
And big data just keeps getting bigger. According to IBM, each day we create 2.5 quintillion bytes of data from everyday activities including social media, digital pictures and videos, online transactions, GPS signals and more. Highlighting the explosion of data, it is estimated that 90% of the data in the world today was created in the last two years alone.
This week, the Securities and Exchange Commission (SEC) voted to propose rules that would require exchanges and broker-dealers who execute high frequency trades to provide trade information to a central repository in real time or near real time as a means for the SEC to better supervise trading activity. This proposal appears to be a result of the Dow Jones Industrial Average’s nearly 1,000 point drop on May 6 and a means for the SEC to better oversee the financial markets.
To many, high frequency trading remains a misunderstood and often unfairly-attacked subset of the investment industry. With this in mind, we’ve decided to take a closer look at what high frequency trading is and what the future may hold for this practice.
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