Ultra Low Latency Circuits

Today’s trading environment is increasingly characterized by trading strategies in which decisions are typically not made by human beings, but by computers that are programmed to make decisions autonomously, and in time periods that are measured in milliseconds. Traditional trading systems were fed data from a variety of secondary sources such as market data vendors, rather than directly from the trading venue or exchange. Indeed, some sources were even ‘tertiary’, with data being fed from market data vendors who had received the data from other market data vendors or as contributions from market participants.

This ‘cascading’ of trading data via secondary sources has led to one-way latencies in the range of several hundreds to even several thousands of milliseconds – delays that are unacceptable in automated trading environments. According to the Tabb Group: “Algorithmic trading and direct market access are the biggest disruptors in modern-day markets going from virtually 0% to 31% of institutional order flow over the past five years. To manage technology in this environment, firms need a massively reliable, scalable, and real-time platform with virtually zero latency as firms now have to cope with market data speeds of up to 70,000 ticks per second. To capture, analyze, and take advantage of data moving this fast latency becomes more critical as milliseconds really matter.”

In addition to the requirement for low latency, the global trading environment is also being impacted by recently enacted regulations in major markets. New regulations such as Regulation NMS in the US and MiFID in Europe include obligations on best execution and trade-through of orders. Brokers and exchanges will now be responsible for demonstrating that they have executed their customers’ trades at the best available price in the market. This will demand that the market data against which trade decisions are made is not only accurate, but timely as well. Executing a trade at a poor price simply because market data is delayed is not acceptable under these regulations.

Vital Voice & Data meets the financial markets’ demands for low latency access to market data and trade execution. We have designed our network for extremely low latency access to major trading venues and sources of market data.

Causes of latency 
Within most networks, there are four main causes of latency:

Network delays are typically quoted as two-way latency figures (round-trip delay or RTD). However in most trading environments, market data is received via one communications path (e.g. direct from an exchange using multicast) whilst orders are sent back via a completely independent path (e.g. via a brokers’ trading system). As such, one-way latency is the appropriate benchmark for measuring network delay for the financial markets.