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

A-Team Insight Blogs

Cloud Platforms Gain Traction in Low-Latency Trading

Cloud platforms – once viewed as suitable only for middle- and back-office operations – are being increasingly adopted to support the front-office. While cloud remains a much overused buzzword, true cloud technologies are now delivering the kind of performance required for low-latency trading, and offer mechanisms to marry business return to technology investment.

This topic is explored further in a white paper written by Low-Latency.com and sponsored by CFN Services, titled High Performance Trading Infrastructure on Demand. Expect further discussion of the convergence of low-latency and cloud technologies – and how big data approaches fit it – at the Low-Latency Summit in New York City on November 15. But here are a few insights into the dynamics of cloud adoption:

* Software-as-a-Service – perhaps the most visible side of cloud – is becoming almost the standard for trading application delivery, with the likes of SunGard’s Valdi and Fidessa as leading examples. SaaS lends itself to servicing smaller firms, buyside players and to moving into new trading areas and geographies quickly.

* NYSE Technologies’ Community Platform was rolled out a year ago in its Mahwah, NJ data centre, and recently also from its facility in Basildon, near London in the UK. When it was introduced, officials expected trading firms to opt for dedicated infrastructure to run their trading systems, while running applications such as back testing and reporting on virtualised servers. Anecdotal evidence, however, suggests that virtualisation is being adopted by many for their trading applications, since the latency and jitter hits are less than expected.

* CFN Services is combining its proximity hosting and connectivity services with virtualised infrastructure, tapping into Tier 3’s cloud stack, which is an optimised version of VMware’s virtualisation software. Tier 3 reckons it has reduced the performance hit of virtualisation to just 7% -making it fast enough for many trading operations, at low cost.

* FCM360 is rolling out its Low Latency Financial Cloud, hosting virtualised infrastructure (from VMware and Citrix) at Equinix, Savvis, Interxion and NTT data centres, where it can readily connect to co-located markets and participants.

It’s still early days for the cloud and low latency combination, and still some FUD to overcome (security, lack of control, performance). But the trend is underway and accelerating. As trading firms turn to big data approaches to help them drive trading, so the cloud will be the natural place to host that big data and make it available as a service.

Looking ahead perhaps a couple of years, deployment of trading applications in the cloud could mean as little as a serer – multi-core and multi-processor, running virtualisation software – to support core business logic, with probably 40Gbps network connections into services providing low-latency data, historic tick databases, machine readable news and sentiment services, trading gateways with risk checks, and post trade TCA and compliance services.

There will still be a place for those firms operating in the single digits of microseconds latency, but it will cost them to do it. For many others – perhaps many new entrants with innovative business models – clouds will be the way to go.

I’d love to know your thoughts, so feel free to leave comments …

Related content

WEBINAR

Upcoming Webinar: Opportunities of new approaches to electronic trading

Date: 9 December 2021 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes 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...

BLOG

Industry Leaders to Discuss Innovation, Cloud, Digital Transformation and Trading Infrastructure at Upcoming Virtual Summit

In its first iteration since the global Covid-19 pandemic, next week’s A-Team TradingTech Summit Virtual has a sharp focus on how emerging technology and infrastructure are presenting capital markets organisations with the opportunity to digitally transform their businesses. With the work from home phenomenon and the explosion in data volumes pointing to the need for...

EVENT

ESG Data & Tech Summit 2022

This summit will explore challenges around assembling and evaluating ESG data for reporting and the impact of regulatory measures and industry collaboration on transparency and standardisation efforts. Expert speakers will address how the evolving market infrastructure is developing and the role of new technologies and alternative data in improving insight and filling data gaps.

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...