Whilst the United States regulatory authorities continue to convene on a regular basis in order to make further steps toward implementing the Volcker Rule, a directive which forms part of the Dodd-Frank Wall Street Reform Act and intends to place a ban on proprietary trading, along with the potential mandatory delay on order execution, technology firms continue to up the pace and offer low latency solutions to market participants.
The latest development in what appears to be a two horse race between the industry and the regulators is yesterday’s strategic partnership between US technology firm Redline Trading Solutions and IntercontinentalExchange, a venue which experienced a stagnation of trading volumes during last month.
Continental American Expansion
In this strategic alliance, Redline Trading Solutions provides support for the ICE futures exchange with its inRush 3 Accelerated Ticker Plant and Execution Gateway products.
In a statement issued by Redline Trading Solutions’ CEO Mark Skalabrin, the company announced: “With the addition of ICE, we now support our market data and order execution capabilities on eight futures trading venues in the United States, Canada and Mexico”.
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Expanding the reach within the American continent is high on the company’s agenda, which is an interesting direction given the possible implementation of mandatory delays in trade execution times by the Securities and Exchange Committee intended remove toxic order flow generated by algorithmic traders utilizing ultra-low latency technology to their significant advantage, and with the imminent Volcker Rule, as Redline Trading Solutions targets its technology not only toward investment banks, brokers and hedge funds, but also proprietary trading firms.
High Speed vs The Future
EBS has recently suggested a latency floor of between 3 and 10 milliseconds regardless of at which executing venue its orders are filled. The difference between the under-10 microseconds taken to execute orders compared to the proposed rulings is substantial.
As the company’s ticker plant and execution gateway solution delivers tick-to-trade performance of under 5.5 microseconds, this is another example of a US based technology company providing a high-speed solution to a major domestic executing venue.
This could be an interesting dynamic to follow, as it may come to pass that Redline Trading Solutions along with North American firms such as CFN Services which are competing against each other for speed supremacy may reach a crossroads at which they may have to look toward technology partnerships overseas. Whilst some technology companies such as RTS Realtime Systems are already making inroads into Asia and the Middle East, the region lacks the sophisticated infrastructure of North America.
On this basis, where the advancement of technology is now so refined that in some cases latency is down to 1 microsecond, yet the powers that be are looming in the background with blanket delay proposals, what form will the future of such technology take?