FOREX TECHNOLOGY
times of extreme market volatility when FX trading firms have to contend with sharp spikes in trading volumes in very short time periods. “On every application stream we reserve a bit of bandwidth. We then monitor that. If a client is suddenly getting packet drop and generating more traffic than they have the capacity to process we will be tracking this and give them advanced warning that their threshold could be hit,” says Akass.
Akass says the BT Radianz network has “a lot of headroom” in its capacity model to allow for peaks and surges in trading activity. Te financial services network provider also does a lot of trend analysis, which involves projecting future trading volumes between six and nine months ahead.
The right SLA
McConnell of Hibernia argues that latency and diversity guarantees are both of critical importance in any SLA. Hibernia offers route-specific latency SLAs, which enable customers of the communications group to purchase a circuit on a specific route and obtain an SLA that includes provisions for expected latency. McConnell says its customers have the right to take recourse against the company, if the Hibernia network fails to meet its provisions for latency provided to customers.
“Diversity is also critically important. In the pre- flow process with our customers, we will have our engineering team present a design which includes a down-to-the-street-level map of the circuit route. Tis level of detail gives them the ability to do due- diligence on their own,” says McConnell. “Tat circuit detail will be in the contract with our customers so they will have the ability to route specific circuits in a diverse way through their network requirements. We will guarantee that their circuit is built that way for the contract.”
Panzica of FiberMedia says along with roundtrip latency, high-speed FX trading firms must pay particular scrutiny to round-trip jitter – the velocity
126 | january 2012 e-FOREX
or variance of latency during a period of time – in any SLA agreement. “Lets say your strategy depends on a 100 microseconds latency metrics and the carrier is able to deliver you that on an average but at peak times at close of business and the opening of the markets the latency goes up to 300 microseconds. For that period of time you are out of the money and you get trades cancelled. With a lower jitter variance you are going to have the predictability that your algorithms are going to be in the money,” says Panzica.
Bob Giffords, an independent banking and technology analyst based in the UK, says it is important for trading firms to closely scrutinize SLAs or else monitor automated reconfiguration activity that can seriously affect latencies and fills. When a network provider reconfigures the network service, Giffords argues that an SLA should ensure such changes are signalled in real time over the application programming interface (API). Otherwise firms will need to monitor latency to detect the change.
“You need to know when events occur so that you can amend routing decisions or allow for changes in fill rates, response time or changes in ‘aggressivity’ -- how often you have to cross the spread in order to get the trade. All
of those things should be monitored. But of course you need to understand very precisely what your normal latency is and ensure you have options in terms of load balancing and routing. It is quite a sophisticated thing that you have to do,” says Giffords.
On-network activation time frames
FX trading firms’ ability to get on to a new network of a managed services provider has been enhanced by the increasingly common practice of providers installing pre-lit fibre routes to specialist financial data centre providers such as Equinix. CFN Services, for example, can provision new services to its customers in a period of between one and two weeks.
Panzica of FiberMedia says managed services providers which already have a lit network in major metropolitan areas such as New York City and
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