Max Bowie: Forget Lower Latency, Focus on Lower Costs

“It doesn’t matter how fast I am if someone makes a better decision around quantifying the markets and trades 30 seconds before me—your strategy is the best way to get faster, not hardware,” Nabicht added.

Of course, if you can trade 30 seconds before a rival, you’re not chasing ticks, but reading trends, something that those with longer time horizons—from intra-day to days, weeks or months—are well accustomed to.

For firms that remain the most latency-sensitive, the focus will likely change from looking at one aspect of latency to understanding latency across every component of the data and trading process. For example, says Rob Walker, CTO at field-programmable gate array (FPGA)-based feed handler vendor xCelor, “We work with clients to understand their problems—there’s no sense in using an FPGA card that saves microseconds if you are getting data in a way that introduces milliseconds.”

Basic Instinct
And while our instinctive pursuit of speed won’t go away—instead becoming a basic requirement of trading, in the same way as order management systems and connectivity—those prepared to settle for “good-enough” latency will expect more capabilities at the same low speeds, just as xCelor is shortening switching times of Altera hardware, enabling it to perform normalization processes on data that would previously have added extra latency. Going forward, it won’t be the raw speed, but what you can do within those timeframes, that will make a difference.