Tuesday, September 20, 2011

Repeat after me: Market Manipulation via High Frequency Trading is a Conspiracy Theory

 Remember Market Makers are only there to provide "liquidity" out of their public service commitment to orderly markets, never to front run slower players that are a nanosecond behind the game. Emphasis in the following article is mine.

The best quote I have come across on this subject is: 

"In the race to Zero, a nanosecond is often the difference between profiting from liquidity
or watching your competitors do it" ~ Larry Tabb

From Securities Technology Monitor:

The firm, Burstream, said it can process a new piece of data in 600 billionths of a second, regardless of how many millions of pieces of data stock markets in the United States are generating.

The transmission of market data messages hit a new peak of 6.1 million messages a second on September 12, according to MarketDataPeaks.com, operated by Exegy. Exegy is a supplier of market data appliances.
Burstream Monday is announcing that its NanoSpeed Market Data Mesh service is being installed at the Nasdaq OMX market center in Carteret, N.J. That is in a data facility owned and managed by Verizon Communications.

Nasdaq members get “a substantial trading advantage – ten times faster than hardware-accelerated approaches,” states Paul Barringer, CEO of Burstream. “Our NanoSpeed MeshTM gives proprietary trading firms the ability to quickly and dramatically increase the performance of their latency-sensitive algorithms.’’

The Nanospeed system also streamlines processing by normalizing all incoming market data, so that it can be managed in one steady stream. The data also is kept in active memory, so processing can be instant. Beyond that, a trading firm’s entire order book at a given moment is held in active memory, so it can be acted on immediately.

In addition, Burstream acts almost as a co-location provider. Burstream will maintain trading servers in the Carteret facility, near Nasdaq’s order matching engines.


“Making the jump from microseconds to nanoseconds will ratchet up the competition and could be a game changer for latency-sensitive strategies and certain trading houses,’’ said Larry Tabb, founder of the Tabb Group.........read in full


Manoj Narang on High Frequency Trading

 

No comments:

Post a Comment