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A-Team Insight Blogs

Velocimetrics Cuts Tick-to-Trade Latency from 100 to 10 Microseconds at Tier 1 Bank

Velocimetrics has completed a project with a Tier 1 investment bank that was losing money on trading due to intermittent latency problems by delivering a tick-to-trade reduction in latency from 100 microseconds to 10 microseconds. This has stemmed the losses and renewed the bank’s competitive position.

The bank’s trading platform comprises a number of disparate systems and used a monitoring system that did not have an end-to-end view of trading and could not identify what was causing the financial losses that cancelled out trading gains elsewhere. Acknowledging the need for an end-to-end, real-time, high volume monitoring and analysis solution to find and fix the glitches, the bank selected Velocimetrics to help solve the problem.

The Velocimetrics solution combines the company’s high speed monitoring and analytics software with Napatech’s SmartNIC filed programmable gate array (FPGA) hardware that includes high volume network capture cards that receive a copy of network traffic from multiple points across the network and provide highly accurate timestamping. The resultant streaming data is analysed in real time by Velocimetrics, a passive monitoring solution that is non-intrusive and does not affect trading latency.

Using the combined solution, the bank could see all the messages in trading flows from incoming market data, through exchanges and internal systems and on to the placement of orders. It pinpointed the intermittent problems occurring across the trade transaction lifecycle in processes handling incoming market data. These processes occasionally delayed the data, causing trading decisions to be made on out of date data and money being lost.

Once the problems were corrected, the bank saw a reduction in tick-to-trade latency from 100 microseconds to 10 microseconds, regained its competitive position and continues to chase down any issues in the network and improve latency.

Paul Spencer, COO of Velocimetrics, says: “In trading, every bit of latency makes a huge difference to the bottom line, and slashing it by a factor of 10 is enormously significant and, of course, profitable for the client.”

The Velocimetrics and Napatech solution also provides the bank with faster alerting, drill-down and root cause analysis, leading to less system downtime and the ability to alter trading strategies quickly, as well as real-time feedback of data and alerts into equities pricing engines that allows the bank to provide optimised pricing decisions in real time.

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