I just read a good article by Henry Young, the director of the London and Singapore-based TS Associates.
It’s a good introduction to the issue of low latency in market feeds to financial institutions. Financial houses have automated algorithms that trade in financial instruments and their derivatives (like options). With GHz clock speeds on the microprocessors, the simpler algorithms work in jig-time. However, your trading algorithms are only so good as the data they are working on. You want your algorithm to have access to the latest market data, and the there is a drive to push latency down as far as it can go, and time savings are in the millisecond range. The speed of light is one of your enemies in this game, so financial houses will pay a premium to co-locate ther servers at the source of the market data. I can’t imagine what this game will do for real estate prices in the area, and where it might end! Will Manhattan one day be a glimmering ghost city? Populated only by humming computers and their attendants.
Some companies are looking to lower latency by using hardware acceleration. Exegy are one, and they offer customers an FPGA-based appliance that claims to be able to speed some things up by an impressive degree.
As I understand it, TS Associates‘ approach is different to Exegy’s. Latency is the big problem today, and Exegy are proposing to solve it with a radical new approach. TS Associates’ approach seems more measured: They recognize that latency is the key problem, but also that it is in the critical path. Companies will be reluctant to take the risk of putting an unproven technology (which from their perspective is a bit of a black box) into a key area of their business. TS Associates propose therefore an FPGA-accelerated appliance that monitors latency. This way they can offer customers an entirely new product that is off the critical path. Adoption would be lower risk for customers, and it would be TS Associates’ foot in the door, their chance to become the financial houses’ trusted supplier of FPGA accelerators for latency-related issues.
I’m looking forward to seeing how Exegy and TS Associates fare over the coming months! Does slow and steady win the race, or does fortune favor the bold?
