High Frequency Trading Review


    There were a number of interesting press releases and announcements at this year’s FIA Show in Chicago, including one from data centre IT solutions provider OnX Enterprise Solutions and infrastructure management company VDIWare, announcing their joint offering of high performance trading solution stacks on a bundled and hosted basis:


    The two firms worked closely together with Intel at their FasterLAB facility in the UK to put together this new service, which is being offered to the market as a packaged solution of market data, hardware, software and CoLo (at Aurora, NY4, LDN1, or FR2) at a starting price of just $1,500 per month.

    Peter Johnson, CEO of VDIware, says that an increasing number of firms are now approaching managed service providers such as VDIWare for expertise on low latency stacks in order to outsource that component of their operation.

    “Traditionally, the managed service model has been restricted to just  venue connectivity and raw material provisioning such as market data rather than the full stack, but this is about going into the lab, doing the testing, and verifying the results. The benefit to the client is that they can start up quickly and easily, and there aren’t any unknowns in place. They just need to focus on their applications, algos and their trading and we give them a reliable stack backing it all up.

     “Initial interest in the service has been from small and medium-sized prop shops that are just starting up trading on the CME. With this solution they can just turn things on and get things going and focus on how they’re going to make money before making any kind of big infrastructure investment”.

    Other than CME, where else is the demand coming from?

    “Our traditional client base is mostly futures and options, so typically those traders would also be looking at ICE, Eurex, CBOE, etc. We’re slowly expanding our CME offering to encompass connectivity and market data between CME and ICE, including some microwave low-latency connectivity. We’re also rolling out the service in London and Frankfurt – by working with OnX we can scale globally to wherever we have our CoLo space”.

    Customers contract with VDIware for the managed services and hosting, while  VDIWare’s partner OnX Enterprise Solutions provides the technology sourcing back up  with things like sizing, capacity planning and testing, to ensure the trading applications are optimised for the clients’ own environments. OnX can also help with migration across platforms where necessary, with extensive knowledge of infrastructure environments .

    Jack Schwartz, Vice President of Sales at OnX, explains the OnX approach.

    “We work with an ecosystem of multiple vendors and end users up and down the trading stack.VDIWare have the domain skills around trading, we have the skills and scale around technology – it’s a team play.   We are able to develop relationships with their engineering groups, and set up the equipment to  run all the necessary tests to ensure the solutions are packaged and fully optimised..

     “For example, we can bring clients in to one of our lab centres in New York (or other centres across the Americas) – where we have just about one of everything – and run test data and routines  to measure and compare performance under  different configurations. That gives the client the ability to make a good business decision on how to deploy the correct technology with the options that are available and what combination of technology best fits their budget and trading/business strategy, HFT style latency or fast enough.”.

    Although the joint offering is initially aimed Tier 2 and Tier 3 trading firms, Schwartz sees an increasing interest from Tier 1 firms too.

    “Some very large companies are seeking additional guidance because they don’t necessarily have the sandbox internally to try out everything for themselves, for example comparing network providers to see which has the lowest latency under a particular protocol in a particular application environment, or TCO on a future direction around storage as firms look to retain more and more data for compliance. We can give them that insight.

     “VDIWare provides trading know how; we can add our expertise in generic hosting supporting back up operations,  so together we can simplify and speed up the time to trade significantly”.

    When putting together their joint offering, VDIWare and OnX worked closely with Intel at their FasterLAB UK-based facility, which was established to focus on financial services workloads, particularly around trading and risk in the capital markets sector.

    Gordon Hughes, Global Sales Director, Financial Services Alliances at Intel, explains the role of the FasterLAB.

    “Within these environments, you need to be able to tune the complete technology stack and to look at everything holistically, from the processor through to the memory, the caching, the application software, the router, the cores on the processor and so on. At the Intel FasterLAB, we’re able to give our partners access to all of that, as well as access to the latest and greatest processors and importantly the finite intricacies of how they are set up to optimise performance.

     “Through our multiple relationships with product vendors, we interchange the layers and benchmark various technology stacks so that end-user customers don’t have to. At banks and trading firms, it can take quite a while to provision something in the data centre, so if we can design  a technology stack in the FasterLAB, prove it out and then publish the results, that benefits the end user because they can see what a ready-made technology stack does. And these stacks can then be bundled “As- a- Service” and taken to market, which is what OnX and VDIWare have done”.

    How do firms gain access to the Intel FasterLAB and what is involved in the testing and benchmarking process?

    “It’s simply a case of getting in touch with Intel or one of these many partners in the team with whom we work.. The Intel investment in this facility is there to help firms that collectively represent our channel to market  – and their customers if appropriate – gain access to the latest technology, and we don’t charge for it.

     The engagements themselves can be quite short. In some cases we’ve seen ISVs walk away with a 50% performance improvement after spending just a couple of days in the FasterLAB working with our engineers. Over and above testing the impact of different infrastructure products, we have some very sophisticated tools that can look at the way software performs in order to identify potential bottlenecks in the ISV’s code. So these don’t have to be long term engagements”.

    It is fascinating to see this kind of collaboration actually taking place between vendors to produce factual lab-based test results on solution stacks containing multiple components. Equally interesting is the fact that these stacks are now available as hosted and managed services at accessible price points not only giving bulletproof access to the latest innovation but converting CapEx to OpEx.

    Is this the way trading solutions will increasingly be deployed in the future?

    For more information, visit http://www.onx.com/ and http://www.vdiware.com/

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