Not-So-Hidden Latency
I had a meeting this morning with Al Moore, one of the founders of Fixnetix, a provider of ultra low latency market data and connectivity. It immediately brought to mind a conversation I had with Tom Groenfeldt earlier this week about hidden latency. It continues to baffle me when financial institutions will spend millions shaving microseconds off of their data handling processes by optimizing their code and implementing CEP solutions, and then, after all is said and done, they’ll take this newly optimized codebase and hook it up to something like Reuters to receive their data, which itself has a latency that is milliseconds more than a low-latency data provider. Why not pocket that money, save those man hours and just switch data providers? Or better yet, do both?
It’s a classic case of not seeing the forest for the trees. Optimizing a system requires looking at the entire system – not just diving into a piece of it. You might very well shave more latency off of your architecture by changing data providers or removing that one extra switch from your network architecture than spending man-years optimizing your event processing software. Financial institutions need to remember to focus on the not-so-hidden latency before diving into a search for hidden latency.
March 20th, 2008 at 3:06 pm
[...] Following on from my previous post on Not-So-Hidden Latency, another topic Tom Groenfeldt and I had started discussing earlier this week was something we at the lab have been thinking about for some time: trader latency or comprehension latency. I’ll explain below. [...]
April 5th, 2008 at 11:44 am
Hi,
I think you’re right.
Ultra low latency market data can only be achieved by providers who control the end-to-end chain.
A real end-to-end Ultra Low Latency Market Data solution requires, for the provider, to
1 – have its own infrastructures WITHIN the exchange to CAPTURE the data at the source,
2 – design/develop/maintain its own feedhandler technology to STANDARDIZE data directly at the source,
3 – design/implement/maintain its own fiber optic network to leverage the speed of light advantage to DISTRIBUTE datafeed to trading engines.
To be able to provide this end-to-end solution, providers need to be able to :
A – rely on strong shareholders to face the huge investment we are talking about,
B – have an experienced staff of developers working for a couple of years on feedhandler development and market data technologies,
C – control each element of this end-to-end chain with its own technology, staff and processes.
To whoever is reading this blog and , as a professional client, is looking for a real end-to-end ultra low latency market data solution, do not forget in your selection process QuantHouse : http://www.quanthouse.com
and do the benchmark !
then, you’ll be able to make sure that your decision is the right one to allow your firm to trade ahead
Jerry