FOREX TECHNOLOGY
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finger checks), but help a firm with capital allocation to trade greater FX volumes and potentially reap higher profitability.
Measuring effectiveness
As to how FX market participants can measure the usability, reliability and scalability of CEP platforms, Hubscher observes, “the market today pretty much understands that it is proven technology and highly scalable. Rather it is more about CEP measuring the performance and monitoring of trading (e.g. algo/ automated trading strategies) to check that they are optimal or need tweaking.”
OneTick’s Lovas says: “CEP technology has ‘cut its teeth’ in the latency charged world of equities. So, buy-side firms looking to FX for alpha as a means to hedge or trade cross-border can leverage that same technology base with the assurance of precedence. CEP has reached a maturity that usability, reliability, scalability, maintainability are the ante to the game.”
However, he contends that the “latency war” will be fought more in the CEP-based trading and risk infrastructures themselves, not as in the classic equities areas like co-location, which he contends does not yet exist in FX. “I don’t think we’ll see this need in FX for a while since the risk latency demands of 1 to 3 microseconds are just not there yet,” he suggests. “However, FX is the most liquid market in the world, implying it’s the most data intensive. So, the demands for management of data are higher due to the diversity.”
In connection with ways of aligning CEP technology with market data infrastructures to help improve trading and risk management operations, Lovas notes that in the equities space pre-trade risk it is moving
116 | october 2011 e-FOREX
to hardware assist via FPGA Tis can be
leveraged from within CEP. Tis new latency war is predicated
on the new U.S. SEC regulation (market access rule requirement, 15c-35), which came in July 2011. “However, managing risk with CEP does mean it affords the option of pre-trade risk for orders in real- time,” says Lovas. “It is not just your classic fat-finger (order quantity, price limit) checks, but also managing portfolio exposure.” (i.e. what portion is impacted by FX exposure and the potential hidden costs that one may be incurring).
CEP as a development tool
As regards to how FX trading firms can leverage CEP as a developer productivity tool in order to focus on business logic and go from prototyping directly into production, the technology plays extremely well to this by shortening development cycles, says Lovas. “CEP is first and foremost a development platform, one that’s highly geared towards building strategies. Many vendors provide a graphical modelling tool for the construction of strategies whether for alpha- seeking or execution. Tese tools have the same objective in mind, to shorten the time from idea to deployment by employing concepts that make them approachable to the non-programmers - Quants and traders themselves.”
Grant says that Sybase is currently witnessing many front-office areas within sell-side organisations where it may take perhaps six weeks or longer to go through a development cycle. “However, using CEP, the ability to visualise the model means that the business can be closer to that development process, which brings a two-fold benefit through reduced errors in the model/ analytics but also means ‘base-level’ development
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