TRADING: HIGH-FREQUENCY TRADING
Just the ticket Lightning quick tick-to-trade is a must-have for today’s trading platforms. Daniel Brown, Milan Dvorak and Adam Lister discuss the pursuit of speed and the minute margins that separate profit from loss Time is money across all financial markets. But none more so than in the high-octane, high-speed world of online trading, where platforms must deliver ever-faster executions for traders whose success depends on speed and agility. So, how do you create a trading platform that gives you that all-important edge? We asked three industry experts to explain what makes a great platform and what today’s traders look for. Few organisations have better technology credentials than Cisco Systems, where Daniel Brown is a technical solutions architect with a strong focus on electronic trading. Many of his solutions are used by tier 1 banks, proprietary traders and hedge funds, and they range from ultra-low latency (ULL) platforms to global exchanges and multicast data distribution networks. As part of the ULL division, Brown is responsible for SmartNICs – network interface cards that offload processing tasks normally handled by a central processing unit (CPU), accelerating traffic and boosting agility. SmartNICs are based on field-programmable gate array (FPGA) platforms – ideal for designs requiring complex logic combined with high-speed processing capability. “A primary objective of a trading system is to take as much as possible away from the CPU,” says Brown. “With SmartNICs and FPGAs, we can send orders directly from the FPGA, without having to do any calls to the CPU. That’s one of the biggest advances we’re seeing today. www.fintechf.com
“Traditionally, software apps were all running in the CPU,” adds Brown, “which meant quite a big delay (by which he means a matter of microseconds) between the application and the NIC card itself. We’ve done away with that through the technologies we’ve been developing at Cisco and other organisations.” One of those organisations is Czech-based Netcope Technologies, which is also driving the use of FPGA technology in trading. Netcope CEO Milan Dvorak explains that it develops FPGA-based tick-to-trade applications. This lowers the latency of trading systems because the whole tick-to-trade pipeline is implemented in the FPGA.
If you have the full tick-to-trade pipeline in the FPGA, you’re always faster than the guys staying in software
Milan Dvorak, Netcope
Tick-to-trade is the time gap between receiving a market ‘tick’ (a price movement) and executing the buy or sell order (the trade). And time is vital – picoseconds, nanoseconds, microseconds: these are the fractions that make the difference between success or failure, profit or loss. Put simply, the lower the latency, the better your trading prospects. Dvorak agrees with Brown that the way to achieve low latency is to move out of the CPU space and into FPGAs.
“FPGAs are so fast,” says Dvorak, “that by the time the standard software even learns about a new message, a new exchange event, the FPGA can process the incoming data, execute the strategy, prepare the response to the exchange and send it onto the wire. If you have the full tick-to-trade pipeline in the FPGA, you’re always faster than the guys staying in software.” However, Dvorak believes that CPUs are still important, because if you move everything to the FPGA, it will become clogged and unnecessarily slow. Sometimes you need to finetune on the fly, he says, and the lower the latency between the FPGA and the software, the more you can do and the more aggressive you can be with your strategies. Dvorak says the FPGA environment has proved its worth during spike periods and, notably, the unsettling market conditions during the pandemic. “Today, when most exchanges are still running at 10 gigabits per second, there’s no buffering with FPGA. It’s just streamlined data processing and you know that your latency is going to be constant and deterministic, even during microbursts, or whatever is happening in the market.” Issue 21 | TheFintechMagazine
107
