Major market makers are already well ahead in the speed game, like the equities’ saying “smart money always moves first”, and are making sure they stay ahead through continuous investment. The next tier of market makers are also getting smart and seeking to invest in technologies that allow them to compete, but in which race? To use the story about the two guys confronting a lion, you don’t need to outrun the lion, you just need to be faster than the other guy. Speed is critical and anyone continuing to think in milliseconds is open to a new breed which only think in microseconds. But we also need to consider context. For example, algorithms range from the benign e.g. Smart Order Routing , to aggressive alpha seeking systems which seek to take advantage of different pricing (latency) between providers or venues. Yes, it’s about fast technology but speed is dangerous if you are only looking in the rear view mirror - looking ahead is about taking action based on real-time flow analysis, not just trying to be the fastest.
Velsys is already well advanced with respect to low latency technologies using “zero copy shared memory”- this is about offering high performance, scalable inter-process communication on an event-driven architecture. In layman’s terms this is about being able to develop an entry level system that can process 100,000 quotes per second and handle 1,000 orders per second and then being able to scale to 1,000,000 quotes and 10,000 orders per second, while retaining average round trip times of 250 microseconds - but it’s not just about speed. Our latest prototype “V-Smart” is designed around intelligent flow control. For example:
• Using algorithms to monitor system flow and adjust client spreads based on key variables.
• Taking a satellite view of each channel and its behavioural characteristics, including: performance, capital utilisation, trade volume, frequency and time series execution characteristics.
• Understanding execution efficiency & slippage for each channel, including internal and external channels.
V-Smart is based on the premise that while speed is fundamental, being in control is critical.
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Velsys specialise in FX supply chain management solutions including aggregation, white labelling, pricing engines, channel connectivity and margin trading.