I spoke at an event this morning in Chicago. The event was hosted by Wall Street and Technology and the theme was “The Intelligent Low Latency Trading Imperative”. It was interesting listening to Ambreesh Khanna of Sun and Jarod Jenson of Forsythe talk about the challenges that software developers face in building applications that perform with extremely low latency. Ambreesh made the point that in the past, the ever-increasing speed of hardware kept the pressure off the programmers when it comes to performance, but that now we’ve hit the limits of single-CPU performance. Now that hardware performance gains are coming via more CPUs/cores rather than faster CPUs, software has to be written to take advantage of the architecture. And the fact is that most software isn’t, and many programmers aren’t ready for the challenge. And it goes beyond writing multi-threaded code. Jarod ran through a check list of the low level things that can contribute latency, and the tools that can be used to pinpoint where latency is being introduced.

All this makes me realized that while we talk about CEP as a platform for rapid application development, we probably don’t make enough of the fact that it’s a way to build scalable, low latency apps without having to develop the deep technical skills that normally requires. For example: you don’t have to know anything about threads to implement your app on Aleri CEP. But it’s automatically multi-threaded, allowing it to run different operations in parallel across multiple cores. Bottom line: writing highly scalable, highly efficient, low latency code isn’t easy. It requires specialized skills. But when you implement your business logic on Aleri, our team, that has those skills, has done the low level work for you. You focus on the business logic; we’ll take care of performance.

Pulsed subscriptions, which deliver an optimal coalesced block of updates to a subscriber at a fixed, periodic interval, has recently been added to the Aleri Streaming Platform. This subscription method rounds out a number of other subscription types that the Aleri Platform already supports: normal low latency lossless subscription, SQL projection/selection during subscription and both lossy and
dropable subscription models. A short description of each subscription type can be found in a short paper I put together on subscription methods.

I would enjoy a discussion on the subscription modes outlined in the paper, and other extensions to subscription types that would bring value when connecting to a Complex Event Processing engine.

In this week’s blog, Chris Skinner, one of the leading bloggers in the European Financial Services Sector makes a very strong case stating that in order for banks to remain competitive in the rapidly evolving financial markets, they need to ensure that they take full advantage of the latest advances in trading technology, especially in the area of low latency.

“In capital markets, where algorithmic trading analytics can make the difference between success and failure, technology is critical to competitiveness. If you cannot compete with another bank’s new derivatives capabilities, which are driven by technical excellence, you might as well give up the ghost. If you lose a millisecond of speed in the investment markets, you are dead. That is why low latency is at the core of capital markets today and technology strategy is at the core of latency. This is why an exchange said to me, “If it takes more than 500 milliseconds to process then it is of no value because it is out-of-date”. Technology strategy is the core focal point for the exchange. This is why an investment firm said to me, “We moved servers to Moscow because it takes 60 milliseconds to route a trade from London to Tokyo via Moscow compared to 240 milliseconds if we process the trade via New York”. Technology strategy is the core focal point for the bank. This is why investment firms are co-locating their servers within exchanges. It is also why we are seeing market blips occurring on a regular basis, because markets move in real-time.In capital markets, technology strategy is at the core of business strategy.” http://www.finextra.com/community/blogs.aspx?mem_id=29084

Chris is absolutely right, however there are additional dimensions that need to be taken in to account when banks look to establish and maintain competitive advantage through the use of technology.

Yes it’s true that once you’ve decided to trade, you want to execute the trade with minimal delay to avoid it being “out-of-date”. However, now that the markets are becoming more and more fragmented and trading decisions are becoming more complex, then not only do you want to get the execution right, you also want to get the when, how, and why right with the same speed and focus.

• For the “when” you could use the latest trade signal generation algorithms that combine indicators such as sentiment, momentum, volatility, liquidity, trade activity and other measures to provide market entry timing points for your trades.
• For the “where” you could use visible and dark pool analysis tools to identify the trading venues that are most likely to enable you to meet your “probability of execution” objectives.
• For the “why” you could use real-time analysis tools that enable you to more fully assess the ebbs and flows of the market to identify trading opportunities and risk.

The markets are becoming more and more complex as they continue to fragment and evolve and technology is the key to keeping ahead of the competition.  But just a word of caution – bad decisions made quickly are still bad decisions.