The financial markets haven’t seen anything like the last couple of months. But what does the shakeup mean for the world of low latency and the vendors servicing it? IntelligentTradingTechnology.com talked with Realtime Innovations‘ Director of Financial Services Strategy and Product Management Henry Sun to find out where the action is now.
IntelligentTradingTechnology.com: The last few weeks have seen tremendous volatility in the financial markets leading to extreme message volumes. What technical demands does that place on a low latency messaging infrastructure?
Henry Sun: The market volatility has put real pressure on many trading systems. There are winners and losers. Winners enjoy today’s market volatility. They see the money in front of them, but current infrastructure is still often the main barrier to making more money. Losers suffer badly. Their infrastructure can’t handle today’s volatility; therefore they make less money than on a normal day.
What really matters are end-to-end latency and throughput. It involves all aspects in data distribution, data processing and normalisation, as well as connection to exchanges.
Any of these points could be a bottleneck in the whole trading process. The real deal here is to have a scalable, high throughput messaging infrastructure with predictable performance.
ITT: Where do you see the current end-user emphasis? Is it purely on the lowest latency, or is data throughput becoming more of an issue?
Henry: When there is volatility, throughput is definitely the main concern. And again it is about the end-to-end throughput. Consistent performance, even under load, is also a key. The point is “Don’t Die!” when opportunities are in front of you. RTI comes from aerospace and defense space, and the technology that serves the US defense industry with lives on the line just cannot die.
ITT: What about end user concerns re. jitter. Are you seeing more emphasis on deterministic and predictable performance?
Henry: We are seeing more interest in measuring and minimising jitter, particularly as increasing message rates put more stress on infrastructure. However, jitter still seems an unfamiliar buzz word to many.
It is the ability to manage the unexpected. Capacity planning was a traditional design concept. There are many visionary and forward thinking architects or chief technology officers who have designed their systems with enough capacity to handle the unexpected volume. Now, RTI brings to financial markets a new messaging infrastructure of managing throughput and jitter.
RTI is extremely focused on minimising jitter as well as average latency. As far as I know, we are the only low-latency messaging supplier to benchmark and publish not just average latency, but also latency and jitter under load. See here.
ITT: How can trading firms leverage a low latency infrastructure to grow business in these markets?
Henry: It means more trades at the best price – capturing more opportunities. It also means the opportunity for industry consolidations, such as hedge funds.
ITT: And what about those firms that do not have such an infrastructure? Can they compete?
Henry: What we can see from the industry trend is traditional sales desk trading volume is shrinking. For those who want to compete in the new game, they have to prepare or they are out.
Source: TABB Group
ITT: What’s next at RTI?
Henry: We truly believe our technology can help financial service companies to compete in the low-latency, high throughput trading space. Our technology also helps to lower Total Cost of Ownership (TCO) and improve Time to Market (TTM). Our technology is reliable, controllable and provide predictable environment, scaling as volume increases.
To demonstrate our commitment to the financial service market, we have opened our office this September at 14 Wall Street. We attended High Performance Technology on Wall Street in September too.
This week we will be attending Chicago’s Futures and Options Expo. We will be presenting how to use RTI Messaging in options trading from receiving market data to messaging bus to trading applications.