HFT

Tonight we had a discussion with Vahan Sardaryan, CEO & Founder of LDA Technologies, to talk about their new STAC-T0 Benchmark which set the bar surprisingly low, 98 nanoseconds, for network tick to trade latency.

During that call, we reviewed the following:

What is the significance of 98 nanoseconds?
Who worked with LDA to make this possible?
In layman’s terms, how was the feat accomplished?
The jitter of the solution was six to nine nanoseconds.
What is the significance of having STAC validate this achievement?
This was months worth of work, what sort of ghost hunting was required?
Who could benefit from this technological advance?
The report highlights a measurement of -68 nanoseconds, can we trade into the future?
Where do we go from here, and can the bar be set even lower?

Scott would like to apologize for the quality of this podcast as both him and Vahan had to dial into the recording system due to, you guessed it, networking issues.

Interested in evaluating Solarflare’s ServerLock Firewall in the NIC technology?
Please send an email to sschweitzer@solarflare.com

Everyone hates waiting, and as such we continually improve the performance of our technology to remove this waiting, often called latency. In markets like financial trading, this latency can be monetized. Several years ago a high-frequency trading shop told me that for them one microsecond (millionth of a second) improvement translated to $60K per network port per day. How is that even possible? Well, if my stock market trade gets into the exchange before your’s I win, you lose, it’s that simple. Prior to May 2017, Solarflare had a network latency solution for electronic markets that delivered 250 nanoseconds (billionths of a second) from tick to trade. The “tick” in “tick to trade” is the market data that arrives from the exchange via a network packet.

So when NASDAQ generates a stock market ticker signal indicating that IBM is now trading at $160/share, your order into NASDAQ could be as quick as 250 nanoseconds plus the time it takes your algorithm to decide to buy. The 250 nanoseconds are how much time it will take for the market data, a UDP network packet, to be brought into the FPGA-based NIC, plus the time it will take to generate the order as a TCP packet and inject that order back into the exchange. To put this into perspective, 250 nanoseconds is the time required for a photon of light travel 82 yards, less than a football field.

If that doesn’t sound fast enough, this week Solarflare, LDA Technology, and Xilinx announced LightSpeed TCP which under the proper circumstances can reduce network latency for trades from 250 nanoseconds down to 120 nanoseconds. So by contrast, 120 nanoseconds are the time required for light to travel 40 yards. So they’ve taken trading from a kickoff return to a few first downs.