Ultra-Low Latency Trading – Industry Context and Challenges
A combination of increased competition, changing regulation and the growth of electronic trading has resulted in a massive growth and fragmentation of market data and transaction traffic in the financial markets.
In order to cater for this ever increasing volume growth, trading firms and execution venues (Exchanges, ECN’s, MTFs) are adapting their trading architecture for ultra-low latency, removing unnecessary network hops, increasing market data distribution bandwidth and developing optimized software solutions on horizontally scalable low cost server platforms.
In the search for ever lower latency trading firms are reducing:
Propagation latency (the time it takes to deliver data from the trading venue) by locating their trading servers as close to the exchange matching engine as possible through the use of co-location or proximity hosting services
Transmission latency (relating to the speed of packet transmission, bandwidth and throughput), by leveraging high speed messaging backbones and high performance networks such as 10gigE
Processing latency through the use of multi-core servers specialized low-latency software architectures.
The challenges facing trading firms & execution venues can be summarized in terms of:
Capacity – which is moving from 100s of millions to billions of order messages/day
Throughput – which is moving from 100,000+ messages/sec to millions of messages/sec
Latency – which is moving from milliseconds to microseconds
Footprint – which poses challenges in terms of data centre space, power and cooling.
While progress has been made in the development of low latency trading architectures, software only solutions suffer from higher intrinsic latency, degraded performance in faster markets and micro-bursts, and the need for higher server capacity (increasing footprint).
Celoxica Accelerated Trading Solutions
Through a combination of leading edge software design and hardware acceleration we can now offer: deterministic performance (zero jitter); ultra-low latency (measured in microseconds) with ultra-high throughput up to millions of messages per second together with accelerated market data and accelerated market access. We provide all this on a single server for both single market & multi-market use cases with our unique Container™ design.