Global Markets Access Options for Financial Traders
Jeff Mezger, Vice President of Product Management, TNS Financial Markets
As financial traders seek out organisations to provides access to global markets, what should they consider?
Firstly, the overheads of building and maintaining the underlying components of infrastructure can be prohibitive for even the largest financial institutions. Instead, most financial traders will look to partner with a specialist managed service provider (MSP). With this model, trading firms do not need to lease entire racks in an exchange colocation facility directly or buy expensive cross-connects to the matching engine for trading access and can benefit from the shared cost of accessing multicast data – the vital market data feeds needed to fuel trading. Partnering with an MSP means they can lease space and connectivity right sized to their specific deployment, tapping into a global network wherever they want to trade, be that London, New York or Hong Kong.
Traders also need reliable connectivity and market data feeds to drive their trading. Companies such as TNS specialise in building shared networks and colocation footprints, offering trading firms access to market data feeds and trading connectivity on demand. By using these shared infrastructure services, traders get the benefits of expertise and technology, at a fraction of the cost of doing it for themselves and without compromising performance.
What are the key latency issues for financial traders?
Ultra-low latency is key for algorithmic trading and trade execution speed can ensure the best market prices are capitalised upon. The best low latency strategies depend on powerful servers housed in colocation with exchange matching engines globally. Processing close to the source of the input data provides the lowest possible latency between input and response – and speed matters. TNS’ ultra-low latency Layer 1 technology, for direct exchange access within the data centre, was the first of its kind and remains one of the most advanced solutions in the market. It has also eradicated the need for multiple switches, as TNS designed a single-hop architecture to deliver direct exchange connectivity in as little as 5 to 85 nanoseconds.
Several factors affect latency, such as hardware location,specification, and the network architecture, but it’s not just important to drive latency lower in the colocation facility where orders are being executed. A key competitive advantage can come from having the best communication links into the colocation facility, to ensure traders can control and coordinate activity between different locations and markets. As such, a complete solution must consider all the detailed components that support a trader’s strategy. This requires highly specialised knowledge and engineering capabilities, including the specifics of each trading venue and data feed, required to support different trading strategies.
What about the Cloud for financial trading?
It can be argued that the Cloud is the go-to for FinTech start-ups and as a result, it is driving innovation on electronically traded markets. Traditional financial trading firms, from exchanges and data vendors, to brokers, hedge funds and even proprietary trading firms, are also embracing cloud computing.
Firms need a strategy for cloud implementation and the right people, with the right skills to facilitate an effective transition. The cloud can be cost-effective to put data in and keep it there, however, taking data out is expensive. Many customers look at the cloud as something that makes business simpler and lowers costs, but firms still need to understand how to operate in a business-as-usual capacity, while simultaneously adopting cloud services where appropriate.
Large scale public cloud providers may currently struggle to accommodate the particular needs of low latency trading and co-located infrastructure required by electronic trading. So, typically traders have used the cloud for less latency-sensitive use cases, like risk management, data storage, development work and modelling new strategies.
TNS Cloud – Server Management, is a breakthrough that aims to bring the benefit of cloud to low-latency trading infrastructures and co-location environments. It delivers a suite of trading infrastructure and support to buy- and sell-side institutions and their vendors. Designed for high-performance exchange trading, utilising TNS’ bare metal servers and ultra-low latency trading connectivity. This end-to-end offering helps to dramatically reduce clients’ trading centre complexity and costs, allowing firms to focus their human resources on mission-critical business goals and go-to-market opportunities.
Jeff Mezger is Vice President of Product Management at TNS with responsibility for its managed services for the financial industry. He oversees product development and strategy for market data, online and data centre services.
Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.