In summary
We believe the Asia Pacific markets will continue to change significantly over the next few years. New entrants to the market, market deregulation, fragmentation and continued improvements in the performance of the major regional exchanges will all play their part in driving up volumes and forcing down the latency benchmarks that firms need to attain in order to remain competitive. With a solid foundation in place, market participants can be confident that they have a trading platform that responds to peaks in market volumes with predictable and consistent levels of latency (Latency Maturity Tier One).
Targeted investment in appropriate instrumentation and monitoring, combined with continued measurement and analysis into the cause and effect of platform latency are the advances necessary to reach Tier Two in our maturity stack. Firms attaining this level of maturity are already typically amongst the most competitive in the market (Latency Maturity Tier Two). Market participants who have developed a comprehensive understanding of their platform latency and its tolerance levels can then start to think about the third tier in the Latency Maturity Stack and the ‘race to zero latency’.
Platform optimization requires the forensic analysis of every layer: network, hardware operating system, messaging and the application to yield the biggest reductions in latency. In many cases the application layer itself can yield the greatest potential for improvements; for example, by reducing the number of components and requirements for messaging and protocol translations between internal systems. However, this can be a complex and costly undertaking, so while the benefit may be clear it may be easier to drive down latency in other areas first; for example, through the replacement of aggregated feeds with direct exchange feeds.
Whether a market participant’s focus is stability, instrumentation or to establish their own internal latency benchmark and beginning the ‘race to zero’, never has there been a greater imperative to care about latency.
Latency: Why Care?
