Dan Barnes
Dan Barnes

Reducing latency in FX – making the case for investing in new trading infrastructures

The arms race in to deliver high-speed, automated trading requires a solid underlying technology architecture – but as Dan Barnes discovers, the multi-price, multi-market nature of FX makes this a complex task.

The foreign exchange market is characterised by a heavy fragmentation of liquidity destinations, yet with only five or six currency pairs dominating the market. For low-latency trading this presents a challenge. Regardless of a trading firm’s internal technical abilities, its speed of trading is largely determined by the infrastructure on which it trades. Without a core market, such as exchanges provide for groups of equity traders, a forex trader may have 50-60 connectivity routes to other firms, each with their own latency issues.  Data centres To reach a destination or counterparty as fast as possible, many firms have to consider which data centres will provide them with the best access to other traders and which networks offer the fastest and most reliable links. To reach the bigger firms is simpler than reaching the smaller firms. “We have found most of our customers desire to be in the three key regional cities in the US, UK and Japan which has become the de facto standard.”...continued

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