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A-Team Insight Blogs

Lucera Details On-Demand Infrastructure for Electronic Trading

Lucera, a spin off from Cantor Fitzgerald, brings its on-demand, high-performance infrastructure for electronic trading to market today, offering trading firms reduced time to market, lower capital expenditure, on-demand scalability and reduced operational risk.

The company and platform emerged from Cantor Fitzgerald in April 2013, after the financial services firm released a group of employees to work on electronic trading technology that would reduce complexity and cost.

Jacob Loveless, founder of Lucera and former head of high frequency trading at Cantor Fitzgerald, explains: “For a couple of years we had considered the cost of electronic trading infrastructure and its returns. We wanted to develop something less expensive so, while still at Cantor Fitzgerald, I asked for a year and a team of developers to progress this. Half the team developed a software defined network that reduces the cost of infrastructure and was built up to production level at Cantor Fitzgerald. The other half of the team built a cloud model including multi-tenanted architecture and delivering bare metal performance that is achieved through the use of a customised version of SmartOS, the operating system based on Sun’s OpenSolaris code.”

These elements were then brought together to produce a platform that Cantor Fitzgerald adopted and decided to spin off as a commercial enterprise under the Lucera brand. The firm provided initial funding for the start-up and retains a majority holding in the company, with the remainder held by employees and an external investor.

Since the spin off, Lucera has cultivated a small group of customers of different kinds to prove its solution. Two exchanges, one an FX exchange and the other a binary options exchange are using the platform, and another FX exchange is expected to onboard shortly. The company is also attracting software providers, including FXone, that want to offer collocated software as a service on the platform.

Wolverine Trading was among the early adopters of Lucera. The firm’s principal, Ethan Kahn, says: “Lucera has given us a new and improved way to manage, deploy and scale our systems on demand, which is especially useful in a highly fragmented market such as FX. We can focus on developing systems to enhance market liquidity, while Lucera helps us manage underlying infrastructure.”

Essentially, Lucera provides web-based access to a combination of collocated hardware, software and the SmartOS operating system, as well as connectivity to exchanges and market data. Users can instantly provision machines in Lucera private cages collocated at three data centres – Equinix’s LD4 west of London, NY4 in New Jersey and CH2 in Chicago – and create connections from a mobile, tablet or desktop computer. Pricing is predetermined on a month-to-month basis, allowing customers to deploy or test new components and strategies without long-term contracts.

The company leases 17,000 miles of fast fibre from Hibernia and Perseus Telecom to connect the data centre deployments, while its software defined network is built on top of a custom built router that runs 44 high speed connections supporting cross-connection within the data centres and connection between the centres. Loveless says the FX exchange already on the platform is achieving single digit microsecond latency within NY4, while a round trip from NY4 to LD4 comes in at 64.82 milliseconds.

He explains: “Lucera’s on-demand infrastructure model offers a cost effective, secure and scalable platform to help firms combat challenges related to infrastructure transparency, connectivity costs, speed to market and balance sheet efficiency. Financial institutions can use the platform to design, procure, test, manage and monitor infrastructure components quickly and outperform in compute intensive, multi-asset trading environments.”

If that is today’s pitch to the market, there is more to come. The company plans to add data centre presence in Asia, most likely starting in Singapore, later this year and is looking at the possibility of using microwave connectivity for market data between New York and Chicago.

Two new products are also in the making. The first is due to be released at the end of the first quarter and is designed to store and manage market and systems data cost effectively, and provide correct back-ups. The second is planned for release at the end of the second quarter and will support large scale messaging to reliably and quickly move data between Lucera systems around the world. Both these products are being used by Lucera in-house before they become generally available.

Loveless suggests Lucera customers will include institutions such as high frequency traders, hedge funds, broker dealers and exchanges that are not looking for ultra low latency, but are looking for latency at the lower end of the spectrum. He concludes: “Lucera’s low cost infrastructure and its scalability can also service new types of customers, perhaps those wanting to use the platform just to test trading strategies or those wanting to move quickly into new asset classes.”

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