SHARE



ABOUT THE AUTHOR


Melanie Rodier
Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news,...
Read Full Bio >>
SHARE



Melanie Rodier | October 26, 2010 |

 
   

Is HFT Ready to Take Over the World?

Is HFT Ready to Take Over the World? As high-frequency traders eye opportunities across the world, emerging markets are joining the low-latency race, increasing exchange throughput capacity, lowering latency and creating a more friendly regulatory environment.

The new rules - DMA models 2, 3 and 4 - address sponsored access for the equities market, allowing high-frequency traders to access low-latency markets without pre-execution controls. Other new regulations allow colocation and the connecting of networks. While these offerings already were in place for the futures market, Brazil's regulator now has made them available for the equities market, too.

"You have to have the regulatory structure right to do electronic trading," notes Adam Honore, research director at Boston-based Aite Group. "You don't want to have to trade through a local broker. If exchanges have delays on quotes or orders, like some Asian exchanges, they're not going to be suitable for electronic trading."

Many emerging markets - including Singapore and, to some extent, Korea - still require regulatory changes to support the expansion of electronic trading, according to Honore. But, with the exception of Brazil, "There's more interest from the non-emerging world for the emerging world to have an open market than there is in the emerging market itself," he says.

For example, traders in developed markets are increasingly interested in Vietnam and Thailand, Honore notes. "But there's nothing coming out of there itself. The appetite is bigger than the bite," he says.

Accelerating Exchange Infrastructure

In addition to operating under a regulatory structure that is flexible enough to enable emerging markets to compete in the global marketplace, exchanges themselves must have "their infrastructure right," Honore adds. Exchanges that recently upgraded their infrastructure include the Tokyo Stock Exchange (TSE), the Warsaw Stock Exchange and the Singapore Exchange (SGX).

Earlier this year the TSE launched its next-generation equities trading system, "arrowhead," with the aim of boosting order capacity and reducing latency. This summer, the Warsaw Stock Exchange signed a deal with NYSE to acquire a state-of-the-art cash and derivatives trading platform provided by NYSE Technologies as part of a multiyear business partnership. And the SGX recently announced a collaboration with Voltaire, a provider of scale-out data center fabrics; Nasdaq OMX; and HP on an ultra-fast, next-generation equities trading platform.

Singapore's new trading engine - SGX Reach - will launch in the first quarter of 2011. It will be delivered through Nasdaq OMX's Genium INET technology, Voltaire InfiniBand switches and the vendor's Messaging Accelerator software, and HP ProLiant server blades. In a benchmark test, the exchange reportedly achieved an average order response time of less than 90 microseconds door to door, providing customers with the fastest execution capability in the world, according to Voltaire. In addition to SGX Reach, the exchange's new data center also will house SGX's market data and clearing infrastructure and offer a wide range of colocation services, the Singapore Business Review reports.

Meanwhile, India also has been actively focusing on boosting its low-latency capabilities. Since fall 2009, for example, firms have been able to colocate at the National Stock Exchange of India (NSE). (Colocation is not yet available at the commodities exchange, NTX.)

When NSE opened its colocation facility in January, initially it included space for 50 brokers, relates Sanjay Das, CTO and founder of Symphony FinTech, a start-up venture based in Mumbai and Edison, N.J., that seeks to design and deploy the next generation of high-frequency algorithmic trading platforms for the buy and sell sides in India. "That space was sold out within one week," he recalls. "Since it was sold out so quickly, they opened a second space in March of this year, with space for 200 computers. A lot of domestic brokerage houses got in." (Deutsche Bank, Citi, Morgan Stanley, Goldman Sachs and MF Global reportedly have colocated machines at the NSE.)

Local brokerages trade mostly through their own prop desks, usually deploying arbitrage strategies, Das says. "But the kind of trading strategies used by players right now will change," he asserts. "The buy side isn't there now - they will demand space in a colocation facility. So we're looking at the tip of the iceberg."





COMMENTS



May 31, 2017

In the days of old, people in suits used to meet at a boardroom table to update each other on their work. Including a remote colleague meant setting a conference phone on the table for in-person pa

April 19, 2017

Now more than ever, enterprise contact centers have a unique opportunity to lead the way towards complete, digital transformation. Moving your contact center to the cloud is a starting point, quick

April 5, 2017

Its no secret that the cloud offers significant benefits to enterprises - including cost reduction, scalability, higher efficiency, and more flexibility. If your phone system and contact center are

June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.