The Extent of the Latency War in Financial Networking

October 4th, 2009 by · 5 Comments

On his own message board, regular commenter Frank Coluccio suggested in response to an Abovenet PR recently that we have a latency war on our hands.  Indeed, a war has been escalating all year in the financial vertical relating to high frequency trading, next generation networks, and ultra-low latency fiber paths.  To refresh my memory I thought I'd go back and find the half dozen or more or so press releases I remembered on the subject since the beginning of the year and look for patterns.

Well, I was reminded that humans have such a short term memory when it comes to news - even someone like me who spends this much time immersed within the news of this sector.  It wasn't even close to a half dozen, and so for now I just collected them - it's quite a list.  I knew this story had been one of the biggest positive threads going on in the telecom and internet infrastructure sectors alongside the economic disaster this year, but I didn't realize how much of the news we have seen has come directly from it.

Here is my initial list of PRs related to next generation, low latency, financial networking:

I'm sure I missed some, feel free to suggest extra links.

Categories: Datacenter · Financials · Low Latency · Metro fiber

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5 Comments So Far


  • Dave Rusin says:

    Bravo AboveNet!!

    When you own the local fiber you can differentiate on performance.

    No Type 2 circuit user can compete with this … or do so at your own peril!

  • anon says:

    wasnt all of this low latency / proximity hosting phenomenon a function of flash trading? which is now banned by SEC ?

    http://www.sec.gov/news/press/2009/2009-201.htm

    all of the [hundreds of millions in] telco and IB/hedge fund hardware thrown at this was to gain a fraction of a second advantage over broader public market. low latency was EVERYTHING when the program traders enjoyed a 30 ms head start, but now its value seems to be unclear and/or substantially diminished. Any traders in the know care to comment?

  • Frank Coluccio says:

    Thanks for the mention, Rob. This is an area that I’ve been tracking since the 19887-88 time frame, during the original Designated Order Turnaround (DOT) days when AT’s and 386s connected to the exchanges by 56kbps lines were thought to be too fast, and stopgaps had to be put in place to avoid runaway conditions and meltdowns.

    I began covering the subject in earnest on my forum back in ’06, with observations and articles posted here:

    http://siliconinvestor.advfn.com/readmsg.aspx?msgid=25993519

    In retrospect, some of those stories can now be seen as the genesis of the BATS system we’ve both alluded to. If you click on the “Read Replies” button in the top right hand corner of the page above, it will take you to a half-dozen other stories, mostly preceding the ones you posted about, from the 2008 time frame.

    anon,

    To the best of my knowledge, the SEC is merely evaluating the situation at this time. During the the interim period, however, I feel quite certain that a number of other schemes are being concocted by the qauant-meisters that will allow traders to deftly avoid any material damage that would otherwise be done by whatever the SEC decides 😉

    frank@fttx.org

  • Frank Coluccio says:

    Correction: The original story post from 2006 I referred to earlier, and the replies that point to an additional six stories, was actually posted here:

    http://siliconinvestor.advfn.com/readmsg.aspx?msgid=23131185

    ps = Rob, you didn’t inadvertently remove one of my earlier links, did you? 😉

  • Frank Coluccio says:

    On Network Latency, an interesting discussion from the current issue of Automated Traders Magazine that I think will interest some here:
    Roundtable Debate: Do you consider that an industry standard for latency would be useful?
    Automated Trader Magazine | October 2009
    http://bit.ly/x88Bk (may require free, jiffy registration)
    Enjoy, Frank

     
     

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