E-Forex_UK_April

FEATURE
not simply a case of repeating what works in the
equities market,” says Berryman. “An FX trader will
need to consider the fact that they will require multiple
local as well as global connections, so it’s important
that their connectivity strategy includes a provider
who can offer a range of routes with an abundance of
direct ﬁbre capacity.They should also look for evidence
of on-net connections to all their key local facilities,
banks and trading platforms ensuring that the highest
levels of security and reliability are maintained with the
appropriate Service Level Agreements in place.”
The area of latency that is easiest to address and
improve is the connectivity portion, says Berryman.
“Latency is directly affected by the route distance and
technology used. Simply put, if you select a provider,
such as AboveNet, that delivers the shortest ﬁ bre path
and remove layers of legacy technology, you can lower Mark Cooper
“Look out for network providers who can support multicastlatency fairly easily.”
natively within the core, allowing you to control messaging
groups without any further conﬁguration overheads”Underlying architectures
Another provider of low latency network products is
the UK-based Exponential-e. Head of ﬁ nancial markets are not always easy to uncover at the point of purchase.
Mark Cooper points out that although time is merely This is most likely to occur at the metropolitan area
the distance between two events, not all point to point network level where backhaul network technologies
connections are the same. And he suggests that traders being used aren’t ﬁt for purpose for use in such an
take the time to look at the underlying architecture of unforgiving sector as ﬁnancial trading. What’s more
their trading connections. “For example, a complex many large network providers are still trying to sweat
routed, or layer three, infrastructure will introduce their installed asset so they sell IP VPNs.The trouble
latency not there in what is called a single-hop or with layer three VPNs is that they introduce latency as
switched layer two architecture. Layer three users need part of the highly complex way they are engineered.”
to conﬁgure GRETunnels to create tunnels across
the core network.These increase the complexity and Conclusion
therefore the overheads and latency.
Ultimately traders must make up their own minds
“Single-hop layer two architectures in contrast allow when looking at low latency network providers,
messages to be distributed to all required servers as however there are some general guidelines which can be
fast and efﬁciently as possible over the WAN. Single- followed, says Cooper. “Those network providers who
hop layer two networks are essentially a simultaneous can deliver an end-to- end Ethernet solution with an in-
broadcast or multicast feature which can add built multicast capability are best placed to address the
signiﬁcant value in a high-frequency automated trading latency issues associated with algorithmic trading.
environment. Within a ﬁnancial trading environment
the distribution of data, simultaneously between your “Latency ﬁgures often represent the round trip of a
servers connected over a Wide Area Network is critical trading route. Some providers show ﬁgures which are so
when trading across venues in different geographical low that they seem too good to be true, and they usually
areas. Look out for network providers who can are.This is because in many cases the ﬁgure quoted only
support multicast natively within the core, allowing represents a signal travelling one way, which of course
you to control messaging groups without any further is of little use. Also only those providers with bags of
conﬁguration overheads and ensuring your data is bandwidth should only be considered.Then you can
simultaneously delivered to all sites, allowing you to run have Gig-E hand offs as standard to minimise the delay
many models concurrently.” caused by any serialisation on the network interfaces.
Finally end-to-end SLAs and latency management tools
Cooper suggests that ﬁrms also keep a close eye out for should be offered to deliver guaranteed uptime and the
network bottlenecks and legacy infrastructure. “They lowest levels of jitter and packet loss.”
70 | april 2010 e -FOREX
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