The requirements of the financial industry need a database that can scale easily and handle hundreds of millions of operations each second. These next-generation challenges are not trivial and cannot be easily solved with disk-based databases, which weren’t designed to handle millions of operations per second. For example, there might be a refresh button on their portfolio page. As soon as the customer logs in, their portfolio needs to be updated with the latest prices-and keep them updated as the brokerage receives prices from the exchanges.Įssentially, we are creating a real-time stock chart. Many brokerage apps don’t try to do this at scale. Instead, these apps pull the latest prices rather than push the prices to millions of clients. The prices of securities can quickly change based on the trading volume, volatility of a specific security, and the volatility in the market. On the other hand, a brokerage could have millions of customers, each of them with a couple dozen securities in their portfolio. Answering millions of customer requests at once.Updating prices of thousands of securities simultaneously.In today’s fast-moving markets, any delays could mean lost opportunity and profits. You need real-time access to prices to answer these questions-yet there are two big challenges: The answers to these questions can lead an investor to buy, sell, or hold specific securities. What are the gains or losses of specific securities in their portfolio?.What is the total value of the portfolio at that time?.Exhibit: The rise in market volatility caused by retail investors during GameStop mania, January 2021ĭuring these frantic times, most investors are looking for two data points about their portfolio that they need access to at all times: Millions of investors were frantically trying to access their portfolios at the same time, but were faced with apps that couldn’t keep up with demand. Investors are not kind to companies whose apps do not perform well when they need it the most. This volatility led to price pressure on thousands of securities. These investors also piled into other meme stocks like AMC Entertainment, causing the overall market volatility to rise more than 76% in a matter of a few trading days as measured by the VIX. Retail investors started trading GameStop stock at record levels. Take, for instance, the GameStop stock mania of January 2021. Today, the professionals in the industry are joined by millions of retail investors, whom have forever changed the landscape of investing. These new entrants are creating huge ramifications for the technology underpinning the trading infrastructure of retail brokerages, exchanges, and clearing houses. Portfolios form the foundation of the wealth and asset management industry. Ever since Harry Makowitz pioneered modern portfolio theory, asset and wealth management professionals have obsessed over maximizing the returns on their portfolio for a given level of risk.
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