FOREX TECHNOLOGY
CLIENT
“For the spot market and for more sophisticated clients that look to trade across multiple asset classes, CEP can be the basis for that - easily blending markets, and looking across the past and present,” says Lovas “And, most CEP vendors offer approachable means to construct sophisticated analysis models, which means firms can deploy and evolve new trading models quickly.
Auxiliary services
Commenting on what types of auxiliary services are likely to see emerge as new applications for FX are built around CEP engines, Lovas contends “Te demand for large-scale data services will likely grow as firms look to understand the changes in markets, the geo-political impact and economic impact. Tis can impact market makers as they look to stay ahead of the market. Leveraging CEP provides a means to implement fast-evolving algos for market making and their need to rapidly re-post prices across numerous counterparties as market conditions change.”
Sybase’s Grant says: “Another area where we are seeing this technology being used is to start making personalised recommendations back out to the customer base. So, based on the trading profile of a particular customer - not just on their historical activity but on their current activity as well.”
Tis might take into account how clients navigate around FX sites and the position of their cursor on the screen. “Certainly some organisations are actually bringing psychology into play to dynamically build offers (e.g. price offers/alerts), rather than it just being predetermined. Dynamically they could create an offer or alert to an end user in milliseconds,” he suggests. Tis might help stop clients going elsewhere.
Ultra low latency FX
Referring to ways leading CEP vendors are delivering a range of high performance configurations to support the most demanding ultra-low latency FX trading applications, Grant says: “If one takes high-frequency trading, it’s not an environment where you would use CEP since you are talking microseconds and nanoseconds. Tat’s an example where people would write code and probably put that on to the chip itself.”
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He adds: “Where the CEP engine comes in is in the performance monitoring such that if a firm is using ultra-low latency techniques, then they’ll more than likely be built and developed in-house. However, they still need to be monitored for performance and risk purposes. And, as a result of the speed of our CEP engine means that it’s an extremely robust environment for undertaking performance or risk monitoring of ultra-low latency strategies.”
Using a monitoring model via a CEP engine on the performance of such HFT trading strategies as closely behind executions as possible, alerts or dashboard functionality can be provided to evaluate the trading status. “Nevertheless, it’s important to note that this type of monitoring should not get in the way of the trading activity itself,” Grant says. In extremely volatile market conditions this can pay dividends as it could significantly improve business agility for FX firms in terms of hedging and/or changing trading limits.
Lovas points out that low-latency in FX has a “different focus” as compared to equities. “In that asset class, latency reduction techniques cut across many aspects of the trading infrastructure, most notably in the networking
infrastructure and co-location. Tis does not apply to FX, and as a result the focus for
low-latency rests higher up in the trade technology investment chain, where CEP technology plays a larger role.
“Te demand for ultra-low latency is only beginning to emerge in FX. Te maturing of CEP in equities has prepared it for what FX might throw at it. CEP technology can leverage multi-threaded architectures/ multi-core processors without burdening the developer with the idiosyncrasies of synchronization or the headaches of dead-locks,” says Lovas.
While leading vendors in the CEP space continue enhance the technology tools available, both sell- side and buy-side institutions trading FX will clearly want to gain a competitive advantage, flexibility and scalability from these tools. Given the explosive growth in FX volumes, CEP providers will need to innovate to provide continuous intelligence to the market.
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