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

A-Team Insight Blogs

Corvil Webinar Discusses the Problems of Packet Loss and Some Potential Solutions

By Zoe Schiff

Packet loss caused by network congestion or packet corruption can make trading strategies irrelevant and cause unwanted costs, but these problems can be resolved by using tools that provide visibility of packet loss and its effects.

A recent webinar presented by James Wiley, director of technical product marketing at network data analytics specialist Corvil, set out the problems of packet loss and its effects on user experience, applications and latency, as well as some solutions. Wiley noted that packet loss is particularly evident when applications are running at sluggish rates, video streams buffer, websites take forever to load, there are timeouts and reconnections, and, in the case of voice over IP handsets, they produce robotic sounds.

Real time, interactive media applications are the most susceptible to packet loss due to their reliance on the User Datagram Protocol (UDP), but packet loss can be equally disruptive in a real time trading environment, upsetting trading strategies and costing money rather than earning it.

Wiley noted some examples of packet delays, saying: “Google estimates that half a second of extra delay results in 20% fewer searches, while Yahoo estimates that 0.4 seconds of delay results in 5-9% less page traffic. Amazon statistics stand out, estimating that an increase in delay of one-tenth of a second can translate into a 1% drop in sales.”

There are two primary causes of packet loss, congestion and corruption. Congestion occurs when there is a bandwidth restriction, either physical or imposed. Physical bandwidth restrictions on a network link during times of peak activity cause bandwidth exhaustion, leading to buffer overflow and packet loss. Imposed restrictions used to improve quality of service taper certain traffic flows to allow higher priority flows access to the network link. Corruption results from problems such as poor quality cabling and faulty hardware. These problems cause parts of a packet to be corrupted during transmission with the result that the packet is then cast aside.

Monitoring and diagnostics tools can help to identify these types of problems, and packet loss can be minimised once its cause is known. Corruption is relatively straightforward as hardware failings can be fixed. Congestion is more complex, but there are solutions. Increasing buffering is a low-cost way to approach congestion, but this solution introduces more latency, making it sub-optimal for latency sensitive applications. Another approach is to increase bandwidth, which is likely to be a more costly solution, but will decrease serialisation delay. The downside here is traffic elasticity as bandwidth consumers such as file transfers open large Transmission Control Protocol (TCP) windows, devouring available bandwidth at the expense of other applications.

While these solutions have pros and cons, the crucial component of any solution is summed up by Wiley, who concludes: “Visibility is the key to understanding both packet loss and its effects.”

Related content

WEBINAR

Recorded Webinar: Trade surveillance: Deploying monitoring and surveillance capabilities for today’s new normal

Let’s face it: The old ways aren’t coming back. A plethora of challenges brought on by the covid-19 pandemic, coupled with unrelenting market volatility and uncertainty, have pushed financial service firms to look for rigorous monitoring and surveillance solutions to meet the demands of the emerging trading landscape. Working from home (WFH) has increased the...

BLOG

Quod Financial Launches Middle Office Suite to Automate Trading Workflow

Quod Financial has added a middle office component to its multi-asset OMS/EMS platform, aimed at allowing customers to automate complex trading workflows. Quod Middle Office is a hosted STP platform that seeks to address inefficient manual processes across all asset classes including equities, derivatives, foreign exchange and fixed income, as well as digital assets. The...

EVENT

Data Management Summit New York City

Now in its 10th year, the Data Management Summit (DMS) in NYC explores the shift to the new world where data is redefining the operating model and firms are seeking to unlock value via data transformation projects for enterprise gain and competitive edge.

GUIDE

Connecting to Today’s Fast Markets

At the same time, the growth of high frequency and event-driven trading techniques is spurring demand for direct feed services sourced from exchanges and other trading venues, including alternative trading systems and multilateral trading facilities. Handling these high-speed data feeds its presenting market data managers and their infrastructure teams with a challenge: how to manage...