Staying on top of the Algos
“Staying on top of things” is the frequently-stated motivation of companies that use computerized quantitative models (i.e., algorithms) to facilitate nanosecond trading, analyze and monitor every link in the technology chain and apply best practice to facilitate lower-latency trading and reduced costs. Latency is all about efficiency, which is ranked according to where a company sits on top of things.
When it comes to the technology that puts them ahead of things, companies talk about trading “at the speed of light”, “lightning fast”, or an infinitesimally slower form “in the blink of an eye”.
This is not hype. In 2011, a London-based firm called Fixnetix — in which the NYSE Euronext exchange is acquiring a 25 percent stake, with an option to wholly purchase within three years — developed a microchip that can execute trades in nanoseconds (one nanosecond is a billionth of a second). The chip it uses was confirmed in independent tests to be able to process trades in 740 nanoseconds first byte in to the last byte out of the exchange.
Click here to view the complete document (PDF).