Donald Finucane
Donald Finucane

Cause and FX: Taking a closer look at the issue of latency

By Donald Finucane, Vice President of Product Management and OTC Data Services, Interactive Data Real-Time Services

Market data latency has become a white-hot issue in the past couple of years primarily because of the rapid adoption of electronic trading, and in particular algorithmic trading. Prior to electronic trading, when traders used screens to get prices and traded over the phone, it didn’t matter so much if the data latency was 30 or 300 milliseconds – the latter representing the time it would take a trader to blink. Now, with computers doing much of the trading, every millisecond counts… So what exactly is data latency? In its simplest form data latency refers to the time it takes to get data from point A to point B. Unfortunately, in the securities industry, there is nothing simple about data latency, particularly when it comes to managing and measuring it. It is difficult to manage because there are several sources of data latency that must be examined individually and as a system, and it is difficult to measure because the units of measurement of latency are becoming...continued

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