The Low-Latency Summit in New York City the other week created a lot of discussion and lots of questions to me. So here is a sampling from that busy day, along with my thoughts.
Q: One of the conference sessions was focused on latency reduction and ROI. What was your take away from that?
A: Less trading firms are engaged in the ‘low latency arms race’ – but there still are a good few in the race to zero. There is more understanding of the need for ROI though measurement of it is patchy and not that scientific. What’s certain is that most firms are putting more thought into their latency reduction projects, and overall they are taking longer to make decisions.
Q: So are there new markets for low latency technology?
A: The FX markets are adopting it, even though the latencies are not as extreme as in the equities market. Fixed income markets look to be the next adopters. Plus there are new geographies to tap, so there’s still much demand.
Q: What are the new technology trends for low latency?
A: It looks like embedding intelligence in the network is one. Arista’s 7124FX is one example, where FPGA technology is in the network switch. Also Pluribus Networks has married Intel Sandy Bridge chips to its switch … that’s what Tibco Software is using for its FTL Message Switch. I think we’ll see more of this in the future.
Q: So is the future FPGA or Intel?
A: Both. And don’t forget AMD with its Piledriver chips. I think there will continue to be debate and new developments in both the mainstream x86 world, and with hardware acceleration. There is clearly momentum behind both approaches. Over time, we might see a natural order develop for what is the best approach for specific applications or functions.
Q: Big data was discussed a bit in one of the sessions. Is it really applicable to low latency?
A: Yes but it’s early days. The leveraging of time series during trade execution is emerging, as is event driven trading based on news and social media inputs. But as was pointed out, financial services in general is not the leader in big data adoption. Possibly it might be the industry that gets most return from it, though.
Got a question for me to mull on over the holidays? Drop me a line at firstname.lastname@example.org.