Kevin Formby Head of Provider Development at BT Global Financial Services
Kevin Formby Head of Provider Development at BT Global Financial Services

Tackling Network Latency issues in Algorithmic FX trading

Trading latency is a parameter that is important in any high frequency trading strategy and surprisingly can also an important factor in low frequency trading strategies as well.

Algorithmic and high frequency algorithmic trading has historically been the preserve of Equities trading, but over the last five years has slowly moved into other asset classes such as FX. A new report from the Aite Group estimates that currently 7% of all FX trading is now executed algorithmically, but that this is likely to double in the next two years. The growth of FX ECNs such as FXall’s Accelor or Hotspot FXi is facilitating the growth of high frequency FX trading and we are likely to see further growth in this area in the coming year.High frequency trading in Equities has led to a latency ‘arms race’ as prop traders seek to extract every single millisecond advantage in the data dissemination, decision analysis, order placement and order delivery chain. The latency ‘arms race’ in FX is currently at a low level, but traders are stockpiling their weapons and getting their technology departments to research and even invent the latest weapons. There are many differences...continued

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