The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Beware Latency Monitoring on the Cheap

Interesting to read a couple of reports of late regarding a “breakthrough” in the world of network latency monitoring – apparently boffins at a couple of universities have come up with an inexpensive way to measure network delays at the tens of microsecond level – and they reckon that Wall Street is going to be very interested in what they’re up to. I guess I am always a bit wary of doing things on the cheap … you get what you pay for, as the saying goes.

The Lossy Difference Aggregator, or LDA, is the subject of work carried out at the University of California, San Diego and Purdue University in Indiana, and proposes adding functionality to network routers to provide a “good estimate” by sampling arrival and departure times of packets flowing through a router. For you geeks, some more detail is here.

I started wondering whether this approach was likely to one day impact the business of those vendors pushing passive approaches to latency monitoring to the financial markets – companies like Correlix, Corvil, Trading Systems Associates and Endace (though the latter appears to have re-focused away to other verticals). And while I think this research has merit, I don’t think LDA is ready for Wall Street. Because while it’s good, it’s not quite good enough.

For one thing, current passive approaches – and yes they cost a bit – can analyse delays in the nanosecond range – tens to hundreds, depending on what’s being measured. And another factor, pointed out by TS-A’s Henry Young, is that LDA just measures network delays at the Data Link Layer (Layer 2), and so does not not take into account reliable messaging protocols that fall into the Transport Layer (Layer 4) or latencies that occur higher in the ‘stack’ – which for trading applications is probably where most latency (and related jitter) occurs.

I can see LDA being useful for some general purpose router diagnostic, and Cisco Systems, which provided a grant to part fund this research, might look to do that one day. But methinks they won’t be pushing this for more serious latency monitoring. For that, they’re more likely to recommend Corvil, in which they have an equity stake.

Related content

WEBINAR

Recorded Webinar: Opportunities of new approaches to electronic trading

Challenged by legacy systems, less than ideal workflows and high costs, front-office trading teams lack the ability to adapt to clients’ evolving needs around integration, speed and multi-asset capabilities. They are also challenged by a capital markets environment characterised by legacy systems, shrinking margins and increased regulatory scrutiny. While these problems cause considerable friction in...

BLOG

Liquidnet Launches Primary Markets for Electronic Trading of New Bond Issues

TP ICAP’s Liquidnet subsidiary has launched a platform to support electronic trading of new issues in fixed income markets. Liquidnet Primary Markets provides an electronic workflow for new issues in Debt Capital Markets (DCM), together with a new protocol for trading new issues. Integrated into the existing Liquidnet Fixed Income trading application, the solution provides...

EVENT

Data Management Summit Europe Virtual (Redirected)

The Data Management Summit Europe Virtual brings together the European data management community to explore the latest challenges, opportunities and data innovations facing sell side and buy side financial institutions.

GUIDE

Trading Regulations Handbook 2021

In these unprecedented times, a carefully crafted trading infrastructure is crucial for capital markets participants. Yet, the impact of trading regulations on infrastructure can be difficult to manage. The Trading Regulations Handbook 2021 can help. It provides all the essentials you need to know about regulations impacting trading operations, data and technology. A-Team Group’s Trading...