Low latency - The need for speed

Low latency - The need for speed

Market data travels fast; in fact it can travel at the speed of light, i.e. 186 miles a millisecond. Due to inefficiencies on its route from its source, for instance the exchange, to the user screen, the data element’s speed is lowered significantly, thereby causing “latency”. Data latency is the time delay experienced when data is sent from one point to another.
Financial firms are in a microsecond technology game to be the first to receive market quotes, in order to be the first to respond to that quote. This speed game is primarily driven by the developments within automated trading or algorithmic trading.  The need for speed has resulted in ultra-low latency data feeds as an alternative to the traditional market data feeds and  terminals provided by the traditional data providers. Today, trading models are fed by data feeds which come directly from the exchanges in order to limit latency as much as possible. By connecting directly to an exchange, as opposed to a data consolidator, investment firms can gain between 150 milliseconds to 500 milliseconds in transmission times. Others chose to co-located their servers that run their  trading models, as close to the exchange as possible.
This “microsecond speed contest” between investment firms has developed a new industry-within-the-industry consisting of suppliers of ultra-low latency feeds (including exchanges),  low-latency data distribution platforms, latency monitoring systems and specialist co-location providers.
Your data strategy requires careful analysis of business demand versus industry solutions.

Logon