faster than Fast; Why FX needs to be Sooo Fast August 16, 2007
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Trade execution in a half a blink of an eye. When Equity algorithmic systems are seeing round trips of 500 ms to 50 ms, FX managers are looking for turnaround times of 300ms to 25ms.
Latency; Survial of the fastest. August 14, 2007
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The latency, speed and movement, of sensitive data has seen it’s obvious effects on the general quality of execution. There are many drivers that include satisfy the need for speed, consistency, and systemic capacity or throughput. Any slow down in this speed can be a losing proposition for the executor. Along with competitive pressure there are regulatory requirements that need to be address that include: MiFID, Reg NMS and Decimalization. The result of these market infrastructure changes is that of putting unprecedented pressure on the speed of execution.
In historical times the transportation of data can be seen to be executed as much as today, and as important. Without Nathan’s Rothschild’s elaborate network of hilltop lantern semaphores, he would not of known the out come of the battle of Waterloo a full day before the British government themselves thus profiteering in an unprecedented way; data and data latency has and always be a crucial component in the execution process. Along with continuing growth of MTFs, ECNs and crossing networks a large fragmentation of liquity is happening. Terms like light, and dark pools are being used to describe the difficulty in finding and access these pools of liquity. There are even special tools the “sweep” and aggregate liquity pools for execution before the pool moves.
All of these issues contribute to execution latency; the time to make a complete round trip; including broker’s internal latency, exchange configuration of hardware and software, order book processing time, and even proximity to exchange hosting services. The Latency time can be from 60ms to 850ms. Latency is not necessarily calculated by the fasted communication; like a tour du-France rider they must be able to be versatile; slowing downing, navigating corners, other obstructions and subjective dangers. It is more accurate to say a low touch and no touch trading will continue to consume and even larger percentage of the execution world.
Reg. NMS is Electronic Trading; Now what is the Technology Impact? August 13, 2007
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The new National Market System Regulation (Reg. NMS) is finalized and dates are being set for implementation deadlines. It seems like it has been long road that we have traveled to get to where we are. But considering the mandate of Reg. NMS was first spelt out originally back in 1970, under §11a of the Securities Exchange Act of 1934, and the confused state of the pan-European efforts on unifying their own financial system, the US is doing a relatively “good” job despite different opinions on how Reg. NMS should be implemented.
Since the original 1970 notion of a NMS, the market and its supporting technologies have naturally changed dramatically due partially in a “renaissance” in technology and the realization of a global economy. Due to this, the SEC has proposed updated high-level regulations to address these profound progressions, which include the following:
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A uniform trade-through rule for both exchange-and Nasdaq-listed securities;
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A uniform market access rule with de minimis fee standard;
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A sub-penny rule prohibiting market participants from displaying sub-penny quotes except for securities with a share price of below $1.00;
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A modified system for the dissemination and pricing of market data; and
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New Regulations NMS, which would consolidate the existing NMS, rules under §11A of the Exchange Act.
So the overall objectives are set and complaints form market participants of possible unfair changes continue to go on. Some are saying the new regulation does not go far enough to renovate the current system, while others say the regulation lacks any kind of global regulatory reassessment of the capital markets.
