Direct Edge, operator of the U.S’ newest stock exchanges, has picked a service of latency management firm Correlix to help it monitor, measure and analyze order and market data flows in real-time.
Correlix’s RaceTeam service, to be installed in the fourth quarter, will enable Direct Edge to provide its customers with an insight just how fast its new EDGX and EDGA exchanges really operate.
Direct Edge launched EDGX and EDGA as full exchanges on July 21. The launch was subject of a Securities Technology Monitor Field Report.
The RaceTeam service will calculate how quickly a trade message can move from when it enters Direct Edge’s data processing system at the Equinix NY4 data center in New Jersey, reaches its trade matching engine and sends an affirmation back to the customer that the message has been received. The trade may or may not be executed.
Coupled with the client’s measurement of just how quickly the trade message migrates through its systems, the trader has an understanding of what it needs to do to reduce latency on its part. It also allows traders to maximize their trading strategies by displaying the timing of Direct Edge’s matching engine. Such an analysis is of particular interest to high frequency traders.
EDGA and EDGX aim to compete against the likes of the New York Stock Exchange, Nasdaq Stock Exchange and BATS. Low latency – a lack of delay -- is a source of competitive advantage when the same stock is traded in multiple venues and many market players are more likely to trust latency measurements when they come from a third party. The more information an exchange can offer the more likely it also is to retain its customers.
Direct Edge’s selection of Correlix, also used by Nasdaq OMX, reflects its decision to buy rather than build a new data latency monitoring rather than upgrade a proprietary platform used with a legacy system, says Kevin Carrai, head of connectivity services for Direct Edge. He declined to comment on Direct Edge’s current latency rate or any projected rate of latency but said that the home-grown system provides latency figures on demand and is not as detailed as Correlix.
Direct Edge developed its new platform over the past eighteen months as a Windows-based system based on Intel Xeon 5500 processors. It replaces a single data center, which had maximized its ability to handle data about market conditions and transactions at 60,000 messages a second.
Where Direct Edge’s servers before processed 32 bits of data a time in a single thread of information at a time, now each processor handles 64 bits of data at a time, in multiple threads. Each Xeon processor, in fact, has multiple “core” processors on it. Each has two electric sockets. Each of those sockets accepts a circuit with four “core” processors on it.
This article can also be found at InsuranceNetworking.com.
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