The financial world has one of the most voracious appetites for information when measured in the number of bits distributed by various communications channels throughout the globe. This data is changing constantly and must be continuously updated.
Satellite-enabled services continue to serve an important role in helping deliver these bits of information to users in a timely fashion.
ComStock is a division of Interactive Data Corp. that provides real-time market data solutions to the financial community. The company, founded in 1960 as Commodity Quotations Inc., was purchased by McGraw-Hill Co. in 1989 and then by Interactive Data in March 2003. Today, ComStock offers clients around the globe financial data covering markets in the United States, Europe, Asia Pacific, Latin America, South America and Africa, compiling financial information from about 360 different sources such as the New York Stock Exchange and Dow Jones News, says Paul Zinone, the company’s general manager, North America.
“It would be very difficult for an institution to go to each of these sources” and compile this data on its own, says Zinone. “They would have to have data lines going to each source and then combine all of those different formats into a single format that makes sense. We basically do that on their behalf. If someone were to go to all those different sources directly, they would be paying hundred of thousands of dollars in data lines to aggregate the content. We take all that info and drill it down to a relatively small pipe in a common format.”
ComStock’s customers include about 1,500 banks, brokerages, money management firms and financial Web sites that depend on the financial
information to arrive on a timely basis. That customer base is fairly evenly divided between institutions who use the data for their own purposes and for financial Web sites who redistribute the data, says Zinone. “If you think about all those companies that take our data and redistribute it to their clients, indirectly, we are providing information to millions of people,” he says. “We compile all this into our computer centers and provide one format for our customers, which we deliver to the institutional marketplace or to the redistribution marketplace — companies such as AOL, Microsoft, Google and Yahoo. If you go to a lot of the financial Web sites and look at their stock quotes, all their financial data comes from ComStock.
“You also have the type of financial traders that do business with the Goldman Sachs, Citibanks and Fidelitys of the world,” says Zinone. “A different side of the market is the financial Web sites, such as AOL, who use it in different methods and different ways. This is critically important to them. Generally, financial information is the number one or number two most requested piece of information on a Web site. There are millions of eyeballs, and if any component is wrong, someone notices. Many financial Web sites provide this data on a 20-minute delay, but some provide it in real-time.”
ComStock compiles its information at two major centers, one in Boxboro, Mass., and one in Hayward, Calif. From there, the company has three primary means of delivery, says Zinone. ComStock contracts with XO Communications and Radianz to deliver data via telephone lines. “With data lines, they are fairly high in cost, but they are also very reliable. The larger percentage of our customers receive data over phones lines.” ComStock also uses the Internet to deliver data to a virtual private network, which Zinone labels as the low-cost, low-reliability option that serves a smaller segment of the marketplace.
“Satellite is the third delivery method and fits somewhere in the middle,” Zinone says. “It is as reasonable cost for our customers and provide reasonable reliability.”

Evolving Satellite Needs

Going back to the early 1980s, ComStock was distributing data only through terrestrial data lines with relatively small bandwidth, Zinone said. At that time, the company was compiling data from only about 50 sources, and the effort did not require much bandwidth. But with customers spread throughout the United States, running point-to-point lines to some locations could be very expensive. “That’s where satellite ended up filling the need we had,” he says.
In the 1990s, satellite was the primary means of delivery for ComStock anywhere outside of the large metropolitan areas, says Zinone. “Our customers at the time were really spread out,” he says. “We were providing data to a lot of individual traders — high-end, high-net-worth traders who used satellite instead of telephone lines. With telephone lines, we were limited to large metro areas, but with the introduction of satellite delivery, it allowed us to distribute data more cost effectively to remote areas.”
Mainstream Data provides Comstock with the uplink and the bandwidth for its satellite delivery services and also installs the satellite equipment at the reception point and provides support. Mainstream, which also provides services to Bloomberg, Reuters and several other information delivery services, develops and deploys end-to-end delivery solutions from teleports and network operations centers in Salt Lake City, New York, and London. “They allow us to focus on what we do best, which is delivering the market data,” says Zinone.
There were some concerns about the use of satellite to deliver such important data, says Zinone, such as the impact of rain fade and other weather events may have on speed, but those concerns have never become an issue for ComStock.
“For us, through the years, satellite has proven to be a very reliable means of delivery,” Zinone says. “In most cases, if our customers have questions or issues, it relates to the market data itself. There are many, many components of that, and the distribution method needs to be as invisible as possible. One of the reasons we have liked satellite throughout the years is because of its high reliability. I don’t remember having too many client issues with delivering our data through satellite.”
At its height in the late 1990s and early 2000s, satellite delivery accounted for about 75 percent of the methods used by ComStock to deliver data to customers. But throughout the past several years, ComStock’s marketplace has evolved, forcing the company to alter its delivery methods as well, says Zinone. Today, ComStock now uses landlines for about 75 percent of its information delivery.
“Trading volumes have gone through the roof, and because of that, the bandwidth required to distribute all of the market data has also grown exponentially,” he says. “It has become a bit more of a challenge for satellites to be able to distribute all the market data that some of our users need. As an example, because of automated trading, the option market alone now requires an incredible amount of bandwidth, and we’re not sending data in a batch process every half hour. We are filling this bandwidth continuously with market data.
“We have 360 sources of information In 2000, all the sources we were distributing may have taken up 1 megabit of bandwidth. Because of increased trading volumes and the growth of algorithmic trading and other variables, what we distribute today is as much as 45 megabits. It has grown tremendously, and it’s just continuous data. This kind of volume makes it very difficult for satellite technology to handle all of this data.”
ComStock has seen an obstacle arise in the form of satellite latency, which is compounded by the timing that is so critical in the financial marketplace. “A 10-second differential in the transmission of data is the difference between the winner and the also-ran,” a satellite industry official says. “The reason is there are extraordinarily efficient trading techniques that institutions are using today. You can be losing very large amounts of money in very large quantities very rapidly. The implications for satellite are obvious,” the official says.
 “A lot of institutions are now measuring their time in milliseconds, so with satellite technology, even if there is a half-second delay, that adds some sort of latency. If this information is being sent to a trading floor at Goldman Sachs, 30 milliseconds is a lifetime.”

Still A Critical Piece

ComStock used to give the customer the option of which delivery method they wished to use, Zinone says. Now ComStock helps make that decision, largely based on what data the customer requires, which determines how much bandwidth is needed and what price range the customers falls in.
“I don’t know too many industries where the rate of information they are delivering is growing at such a massive clip,” Zinone says. “We’re at a 300-plus-percent-per-year clip, and we’re already starting with a lot of information. To grow at that rate makes it very difficult for any of our carriers, whether across a [virtual private network] or a landline. Some of our customers started two years ago requiring a 1-meg phone line for $500 a month and now required a 45-meg line that may cost them $7,500 per month, and that’s just for the communications, which is a very small component of our business.
But satellite still fulfills some critical roles for ComStock and its clients, Zinone says. “The way we now position satellite is for those clients located in certain remote areas and those that have non-trading applications where seconds of latency are not a big deal,” he says. “It also works well for someone that requires the service to be up and running fairly quickly. We can install the satellite systems in a few days, while it might take two to three months to install a terrestrial data line. If you take that globally, satellite plays an ever larger role, because there are so many areas around the world where it’s not cost effective to deliver information via landline,” Zinone says.
A lot of ComStock’s clients also use satellite as a backup to their primary phone lines, he says. “The good news for satellite is it really is the only way to provide a secure secondary backup channel for delivery of financial quotes,” an industry official says. “In terms of risk diversification, satellite is perfect.”
The other piece of good news is that traders, hedge funds and institutions across the financial spectrum are seeking even more information. In the past, these traders may have been content with feeds of Dow Jones or Reuters news service, but now those traders are seeking video feeds, and satellite can help meet that need.
“If you look at trading desks now, there are rows and rows of TV monitors and rows of LCD displays that provide information,” the official says. “Traders need more information where the time delay is not as critical, and that data has to be assimilated and evaluated before it is acted upon. If you have a lot of information that represents a lot of bits getting to a lot of people at the same time, satellite is perfect.”
So while satellite may have seen its role lessen in some parts of the financial industry, the technology remains a critical piece of an overall communication network where every millisecond counts.