How Ultra-low Latency Reaches the Trading Infrastructure?


Latency has been in discussion in the financial market since high-frequency trading rose to popularity. Low latency is now being replaced by ultra-low latency in the liquid markets. This has been possible after the technology is able to slash the tick-to-trade latencies even below a microsecond. While there are many vendors out there outlining how their products can contribute to faster trade, comprehensive trading infrastructure would always need good technical expertise.

How will trading strategies impact ultra-low latency?

The latency of any trading strategy completely depends on the strategic algorithms of the firm. But there are certain other general decisions that revolve around the trading strategies, which will be helpful in acknowledging the latency-dependency of the algorithms. It will also be helpful in determining if the ultra-low latency is worth the investment in the infrastructure.

There are many latency-sensitive strategies which can provide more alpha to the faster trades but only ultra-low latency will help make the gains. Frequently, these are considered the multi-market strategies and fragmentation will make it impractical to carry ultra-low latency with every exchange. Here, if you want to reduce the latency, it can be done through networking decisions.

If the complexity of the feeds increases, the latency from data normalization and order routing will increase with market fragmentation. If one wants to compete in a fragmented market, one will need sufficient capacity, and a ticker plant that has high throughput.

Ultra-low latent trading technology

The foundation of attaining ULL is application-specific hardware. There are many vendors who provide piecemeal components, but there are only a few standard elements on which it can be built upon. The FPGAs have become a very common baseline for the ULL as an improvement over the software that runs over community servers. 

The FPGAs define the steps in the entire trading process mechanically through the logic gates. This ultimately results in higher and more consistent speeds even when the volumes are very high.

Along with the FPGAs, the ticker plant hardware has an increased speed of processing and processor count in order to optimize the loading and ordering of the data packets. The network that bursts on volatile trading days will cause a serialization and queuing latency that has the capability of eroding or eliminating profitable trades.

In this regard, Orthogone ultra low latency trading solutions will be able to provide you with reliable services and functioning despite all odds.