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TNS is an engineering-focused company which has been an edge for us. Our experienced teams know the market and our engineers are hard-core network people. We continuously invest a great amount of financial and human resource into developing better monitoring tools and procuring equipment to remain competitive.” “Some of the issues that occur can stem from the customer side rather than the network side he adds, in terms of the bandwidth available. It can slow process up significantly if the customer doesn’t have the infrastructure in place to bring the necessary fibre into their facility.
“In the case of physical bandwidth it is not something you can flip on overnight. You have to procure an upgrade which can result in a time delay. Sometimes we can make temporary adjustments. For example if the customer has some information that they don’t need, we could temporarily filter it to remedy the problem..”
Outside of the network
Measuring latency at a networking layer should be augmented with code that gives some level of awareness of what is happening within trading applications, and intelligence of the analytics that the latency measurement is going to apply advises Cooper. “For example, can you differentiate a transaction from an acknowledgment?” he asks. “As you start to use increasingly granular latency measurement you have got additional considerations with analyser performance
and capture, time stamps, reference clocks etc.” “Te firm’s chief information officer should have an understanding of the pre-trade, trade and execution latency budget end-to-end,” he suggests.
“Tat will give you a measure of where you are. You’ll also want to determine items like what the turnaround time at the execution engine is, as that will ultimately constrain what you can do in terms of latency. As you start to dissect the end-to-end latency you will get greater clarity around the performance of individual elements and where it makes sense to focus time and budget.”
As part of this process one cannot ignore the importance of the trading applications that are used and their effect on latency. When trying to improve on their performance, the decision of whether to buy or build the systems in-house has consequences. Packaged solutions are improving in quality and can also be monitored by a service level agreement to ensure that they are performing.
“As a very interested observer, rather than a supplier of IT, I think FX traders have to look at where they very clearly can differentiate and what they can maintain,” says Cooper. “My perception is that a lot of the systems and capabilities are becoming less differentiated; best current practice is no longer ‘black magic’. So there are now quite a few options using a very capable set of systems and service providers. You have to look very closely at yourself and be honest.
july 2012 e-FOREX | 89
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